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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) An example of allocating joint costs using physical measures

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MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) An example of allocating joint costs using physical measures is allocating joint costs based on the 1) A) volume of the products produced C) constant gross-margin percentage B) sales value at split-off point D) net realizable value 2) 2) Beverage Drink Company processes direct materials up to the split-off point where two products, A and B, are obtained. The following information was collected for the month of July: Direct materials processed: 3000 liters (with 15% shrinkage) Production: 600 liters 1950 liters Sales: $35.00 per liter $30.00 per liter The cost of purchasing 3000 liters of direct materials and processing it up to the split-off point to yield a total of 2550 liters of good products was $7500. There were no inventory balances of A and B Product A may be processed further to yield 500 liters of Product Z5 for an additional processing cost of $ 170. Product Z5 is sold for $25 per liter. There was no beginning inventory and ending inventory was 125 liters. Product B may be processed further to yield 1875 liters of Product W3 for an additional processing cost of $325. Product W3 is sold for $35 per liter. There was no beginning inventory and ending inventory was 25 liters. If Product Z5 and Product W3 are produced, what are the expected sales values of production, respectively? A) $17,500 and $46,875 B) $12,500 and 865,625 C) 865,625 and $ 12,500 D) $21,000 and $58,500 3) Which of the following is a disadvantage of using negotiated transfer price? A) It may lead to divisional enmity because negotiation process may cause frictions among departments. B) Negotiations usually require much time and energy thereby consuming precious managerial time. C) It requires each division manager to put forth effort to increase division operating income. D) Negotiated transfer prices take away the divisional autonomy as prices depend on bargaining strength. 4) The method of profitability analysis recognizes the two basic ingredients in profit-making: increasing income per dollar of revenues and using assets to generate more revenues A) Residual-Income B) Balanced Scorecard C) DuPont D) Economic Value Added 5) 5) What is the name of a cost of production process that yields multiple products simultaneously? A) joint B) byproduct C) main D) separable 6) Crush Company makes internal transfers at 155% of full cost. The Soda Refining Division purchases 41,000 containers of carbonated water per day, on average, from a local supplier, who delivers the water for $58 per container via an external shipper. To reduce costs, the company located an independent supplier in Illinois who is willing to sell 41,000 containers at $38 each delivered to Crush Company's Shipping Division in Missouri. The company's Shipping Division in Missouri has excess capacity and can ship the 41.000 containers at a variable cost of $12.50 per container. What is the total cost of purchasing the water from the Illinois supplier and shipping it to the Soda Division? A) $2,070,500 B) $1,558,000 C) 52,378,000 D) 3512,500 7) 7) Inflation clouds the real economic returns on an asset and A) makes variable-cost-based ROI lower B) makes variable-cost-based ROI higher C) makes historical-cost-based ROI lower. D) makes historical-cost-based ROI higher TRUE/FALSE. Write 't if the statement is true and 'F if the statement is false. 8) All separable costs in joint-cost allocations are always incremental costs 9) The only allowable method of joint cost allocation is net realizable value which is specified by Speated by FASB. 10) A company may choose to keep one set of accounting records for tax reporting and a second set for internal management reporting. 10) 11) 11) Stock options give executives the right to buy company stock at a specified price, called the exercise price, within a specified period. 12) Classification of main products,joint products, and byproducts can always be done with ease. 13) Cost-based transfer prices are helpful when markets are not perfectly competitive

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