93.
In joint product costing and analysis, which one of the following costs is relevant when
deciding the point at which a product should be sold in order to maximize profits? (CMA
adapted)
11–82
94.
Delite Confectionary Company produces various types of candies. Several candies could
be sold at the split-off point or processed further and sold in a different form after further
processing. The candies are produced in a joint processing operation with $500,000 of
joint processing costs monthly, which are allocated based on pounds produced.
Information concerning this process for a recent month appears below:
Candy
type
Number
of
pounds
Price
per
pound
at
split-
off
Further
processing
costs
Price after
processing
further
Sweet
Mats
50,000
$8
$75,000
$10.00
Chocolate
Delight
100,000
$10
$30,000
$10.50
Minty
Wonders
25,000
$5
$20,000
$5.50
11–83
95.
Delite Confectionary Company produces various types of candies. Several candies could
be sold at the split-off point or processed further and sold in a different form after further
processing. The candies are produced in a joint processing operation with $500,000 of
joint processing costs monthly, which are allocated based on pounds produced.
Information concerning this process for a recent month appears below:
Candy
type
Number
of
pounds
Price
per
pound
at
split-
off
Further
processing
costs
Price after
processing
further
Sweet
Mats
50,000
$8
$75,000
$10.00
Chocolate
Delight
100,000
$10
$30,000
$10.50
Minty
Wonders
25,000
$5
$20,000
$5.50
96.
Delite Confectionary Company produces various types of candies. Several candies could
be sold at the split-off point or processed further and sold in a different form after further
11–84
processing. The candies are produced in a joint processing operation with $500,000 of
joint processing costs monthly, which are allocated based on pounds produced.
Information concerning this process for a recent month appears below:
Candy
type
Number
of
pounds
Price
per
pound
at
split-
off
Further
processing
costs
Price after
processing
further
Sweet
Mats
50,000
$8
$75,000
$10.00
Chocolate
Delight
100,000
$10
$30,000
$10.50
Minty
Wonders
25,000
$5
$20,000
$5.50
The joint processing costs in this operation:
97.
Delite Confectionary Company produces various types of candies. Several candies could
be sold at the split-off point or processed further and sold in a different form after further
processing. The candies are produced in a joint processing operation with $500,000 of
joint processing costs monthly, which are allocated based on pounds produced.
Information concerning this process for a recent month appears below:
Candy
type
Number
of
pounds
Price
per
pound
at
split-
off
Further
processing
costs
Price after
processing
further
Sweet
Mats
50,000
$8
$75,000
$10.00
Chocolate
Delight
100,000
$10
$30,000
$10.50
Minty
Wonders
25,000
$5
$20,000
$5.50
98.
The Foxmoor Company produces three products, X, Y, and Z from a single raw material
input. Product Y can be sold at the split-off point for total revenues of $50,000 or it can be
processed further at a total cost of $16,000 and then sold for $68,000. Product Y:
99.
Product C is one of several joint products that come out of Department M. The joint costs
incurred in Department M total $40,000. Product C can be sold at split-off or processed
further and sold as a higher quality item. The decision to process further should be based
on the:
100.
The characteristic that is most often used to distinguish a product as either a main
product or a by-product is the amount of:
101.
If by-product revenue is treated as other revenue instead of deducted from the net–
realizable-value of the main products:
102.
Products with a relatively minor sales value are called:
103.
Joint products and by-products are produced simultaneously by a single process or series
of processes and:
11–90
104.
Essay Questions
11–91
105.
For each of the support service costs listed below, name an appropriate cost allocation
base:
(1.) Building rental
cost
(2.) Payroll
department salaries
(3.) Company
cafeteria cost
(4.) Human resources
department
(5.) Accounting
department
(6.) Computer
equipment
depreciation
(7.) Insurance costs
on computer
equipment
(8.) Depreciation on
company airplane
(9.) Factory manager
(10.) Cost to clean
company uniforms
(11.) Costs of
corporate daycare
facility
(12.) Equipment
maintenance
(13.) Cost of corporate
workout facility
(14.) Building
insurance
(15.) Cost of delivery
truck for a moving
company
11–93
106.
Wimbledon Corporation has two production Departments: Assembly and Machining and
two service departments: Personnel and Cafeteria. Direct costs for each department and
the proportion of service costs used by the various departments for the month of July,
2016 are as follows:
Proportion of Services Used by:
Department
Direct
costs
Personnel
Cafeteria
Machining
Assembly
Personnel
$30,000
0.40
0.30
0.30
Cafeteria
$50,000
0.20
0.50
0.30
Machining
$80,000
Assembly
$70,000
Personnel
$30,000
Machining
$80,000
Assembly
$70,000
Personnel
Cafeteria
Machining
Assembly
Direct
11–95
107.
Prestige Financial Credit Company produces two styles of credit reports: Individual and
Corporate. The difference between the two is the amount of background information and
data collection required. The Corporate report uses more skilled personnel because
additional checking and data are required. The relevant figures for the year just completed
follow. Total support service costs to be allocated are $3,200,000.
Allocation base
Individual
Corporate
Data purchased
$40,000
$80,000
Research hours
24,000
30,000
Interview hours
1,000
10,000
Number of reports
16,000
3,000
Allocation
11–97
108.
Data Master is a computer software consulting company. Its three major functional areas
are computer programming, information systems consulting, and software training.
Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop
total costs for the functional areas. These costs will be used as a guide in pricing a new
contract. In computing these costs, Moore is considering three different methods of
allocating overhead costs-the direct method, the step method, and the reciprocal method.
Moore assembled the following data on overhead from its two service departments, the
Information Systems Department and the Facilities Department.
Service
Departments
User Departments
Info
Systems
Facilities
Computer
Program
Consult
Training
Total
Budgeted
Overhead
$50,000
$25,000
$75,000
$110,000
$85,000
$345,000
Info
Systems
(hrs)
400
1,100
600
900
3,000
Facilities
(Sq ft)
200,000
400,000
600,000
800,000
2,000,000
11–99
109.
Data Master is a computer software consulting company. Its three major functional areas
are computer programming, information systems consulting, and software training.
Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop
total costs for the functional areas. These costs will be used as a guide in pricing a new
contract. In computing these costs, Moore is considering three different methods of
allocating overhead costs-the direct method, the step method, and the reciprocal method.
Moore assembled the following data on overhead from its two service departments, the
Information Systems Department and the Facilities Department.
Service
Departments
User Departments
Info
Systems
Facilities
Computer
Program
Consult
Training
Total
Budgeted
Overhead
$50,000
$25,000
$75,000
$110,000
$85,000
$345,000
Info
Systems
(hrs)
400
1,100
600
900
3,000
Facilities
(Sq ft)
200,000
400,000
600,000
800,000
2,000,000
