Choose the best answer for each of the following multiple-choice questions.

1. A company manufactures two joint products at a joint cost of $1,000. These products can be sold at the split-off point or further processed at an additional cost and sold as higher quality items. The decision to sell at split-off or further process should be based on the:

a. assumption that the $1,000 joint cost is irrelevant.

b. allocation of the $1,000 joint cost using the relative sales-value approach.

c. assumption that the $1,000 joint cost must be allocated using a physical-measure approach.

d. allocation of the $1,000 joint cost using any equitable and rational allocation basis.

2. For purposes of allocating joint costs to joint products, the sales price at point of sale reduced by cost to complete after split-off is assumed to be equal to the:

a. relative sales value at split-off.

b. sales price less a normal profit margin at point of sale.

c. joint costs.

d. total costs.

3. Under an acceptable method of costing by-products, inventory costs of the by-product are based on the portion of the joint production cost allocated to the by-product

a. but any subsequent processing cost is debited to the cost of the main product.

b. but any subsequent processing cost is debited to revenue of the main product.

c. plus any subsequent processing cost.

d. less any subsequent processing cost