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Cost Accounting 101 Practice Test: Cost Allocation - Joint Products and Byproducts
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Cost allocation is the process of assigning costs to activities, projects, people, or other cost objects. The goal is to fairly spread costs across departments, calculate profitability, and derive transfer prices.  Joint and by-product costing are methods for allocating costs to different products that are produced from the same process or materials. They are often used in industries that deal with natural resources, such as oil, gas, mining, or agriculture.  In cost accounting, joint products are two or more products that are produced simultaneously from a common input or process.... Show more
Cost Accounting 101 Practice Test: Cost Allocation - Joint Products and Byproducts
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25 Questions

1. The products of a joint production process that have low total sales values compared with the total sales value of the main product or of joint products are called byproducts.
2. The sales value at splitoff method is preferable when selling-price data exists at splitoff.
3. Separable costs include manufacturing costs only.
4. The constant gross-margin percentage NRV method makes the simplifying assumption of treating the joint products as though they comprise a single product.
5. The focus of joint costing is on allocating costs to individual products:
6. The physical-measure method:
7. All separable costs in joint-cost allocations are always incremental costs.
8. If managers make decisions to sell or process further using an incremental revenue/incremental cost approach, which method will show each product budgeted to have a positive (or zero) operating income on the resulting budgeted product-line income statement?
9. Outputs with a negative sales value are:
10. Which of the following methods of allocating costs use market-based data?
11. An example of a market-based approach to allocating joint costs is (are) allocating joint costs based on:
12. All costs incurred beyond the splitoff point that are assignable to one or more individual products are called:
13. Joint costs that do NOT differ between alternatives are particularly relevant for decision making.
14. Litigation may be a reason that joint costs are allocated to individual products.
15. Joint costs are the costs of a production process that yields multiple products simultaneously.
16. Outputs with zero sales value are accounted for by:
17. A sound reason for reporting revenue from byproducts as an income statement item at the time of sale is to lessen the chance of managers managing reported earnings.
18. A reason why a physical-measure to allocate joint costs is less preferred than the sales value at splitoff is:
19. The production method of accounting for byproducts recognizes byproducts in the financial statements at the time when production is completed.
20. The only allowable method of joint cost allocation is specified by FASB.
21. When a product is the result of a joint process, the decision to process the product past the splitoff point further should be influenced by the:
22. Which of the following is a reason to allocate joint costs?
23. Which of the following is NOT a primary reason for allocating joint costs?
24. Proper costs allocation for inventory costing and cost-of-goods-sold computations are important because:
25. Separable costs are incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.

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