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What guideline should be used in determining whether a joint product should be sold at the split-off point or processed further?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter6: Process Cost Accounting—additional Procedures; Accounting For Joint Products And By-products

Section: Chapter Questions

Problem 17Q

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What should be considered when deciding whether a joint product should be sold at the split-off point or processed further?
Are allocated joint processing costs relevant when making a decision to sell a joint product at the split-off point or process it further? Why?
A decision that involves potential further processing of joint products is which kind of decision? relevant make-or-buy sell-or-process-further special-order keep-or-drop
Briefly describe the treatment of Joint Costs when making a sell-or-process-further decision. What is the decision rule in deciding whether to sell a product or process it further?
What are joint costs? How do they affect the sell or process further decision?
In which scenario would an adjusted sales value be used to assign costs? a. If abnormal losses occur during production of joint products b. If a joint product is to be processed further after the point of separation c. If one of the joint products has negligible market value d. If joint products are separately identifiable before split-off point
[CPA Adapted] For purposes of allocating joint costs to joint products, the sales value at splitoff method could be used in which of the following situations? No costs Cost beyond beyond splitoff splitoff a. Yes No b. Yes No c. No Yes d. No Yes
Which of the following methods allocates joint costs based on the potential market value at the point where the products will be separated to be processed further? a.net realizable value method b.weighted average method c.market value at split-off method d.physical units method
Which of the following are identifiable as different individual products before split-off for cost accumulate purposes? Option By-products Joint productsA No NoB Yes NoC Yes YesD No YesQuestion options: a) A. b) B. c) C. d) D.
a) Briefly describe the treatment of Joint Costs when making a sell-or-process-further decision. b) What is the decision rule in deciding whether to sell a product or process it further?
“ Managers must decide whether a product should be sold at splitoff or processed furthur.The sales value at splitoff method of joint-cost allocation is the best method for generating the information managers need for this decision.”Do you agree? Explain.
Using a physical measurement method, what amount of joint processing cost is allocated to product B? Using sales value at split-off, what amount of joint processing cost is allocated to Product B?