Chapter 9- Joint-Process Costing

Question 1

Joint Process

Answer 1

Simultaneously converts a common input into several outputs.

Question 2

Joint Products

Answer 2

Product that jointly result from processing a common input.

Question 3

Split-off point

Answer 3

it is the point at which joint products appear in the production process.

Question 4

Final Product

Answer 4

is one that is ready for sale without burgher processing.

Question 5

Intermediate product

Answer 5

a product that might require further processing before it is salable to the ultimate consumer, wither by the producer or by another processor.

Question 6

Joint Costs

Answer 6

the cost to operate joint processes.

Question 7

What are the sequences of decisions involve in the management of joint processes?

Answer 7

decide which products to produce and determine how to allocate joint-process costs.

Question 8

Further-or-processing further decision

Answer 8

1- The potential additional revenue after further processing

2- the additional costs to process further.

Question 9

Net Realizable Value (NVR)

Answer 9

Is the measure of a product’s contribution to profit after the split-off point
Computing the NRV of each set of products provides a comparison of each product’s sales revenue to costs incurred after split off.

Question 10

What is relevant to product decision?

Answer 10

Only the revenues from selling or processing beyond the Split-off point and any expenditures for additional processing are relevant factors.

Question 11

Reasoning for Allocating Processing Costs

Answer 11

For financial and tax reporting to value inventories and cost of goods sold.
It can serve as measures of some departmental or division costs when executive performance is evaluated.
Can be useful in valuing inventory for insurance purposes.
can be a significant factor in the way regulators determine rates.
Many contracts involve parties with potentially conflicting interests.

Question 12

Joint Cost-allocation methods

Answer 12

1- net realizable method

2- physical-measures method

Question 13

Main Products

Answer 13

Joint Costs are allocated only to main products.

Is a joint output that generates a significant portion of the net realizable value from the process.

Question 14

By product

Answer 14

is the output from a joint-production process that is minor in quantity and/ or NRV when compared to the main products.
Do not receive allocation of joint costs.

Question 15

Net Realizable Method

Answer 15

Allocates joint costs based on the NRV of each main product at the split-off point.

Question 16

Physical- Measures Method

Answer 16

a joint-cost allocation based on the relative volume, weight, energy content, or other physical measure of each joint product at the split-off point.
Companies may prefer this method when the prices of their output products are highly unpredictable.
Used when:
- significant processing occurs between the split-off point and the first sales opportunity.
- when the market does not set product prices.

Question 17

By-products Methods

Answer 17

1- Consider the By-product’s NRV as other revenue

2- deduct the by-product’s NRV from the costs of main products.