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Chap009

Cost Management: Strategies for Business Decisions

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Chapter 09 - Joint-Process Costing Chapter 09 Joint-Process Costing True / False Questions 1. An intermediate product is a product that might require further processing before it is salable to the ultimate consumer, either by the producer or by another processor. TRUE Difficulty: Easy Learning Objective: 1 2. A joint process simultaneously converts a common input into several outputs. TRUE Difficulty: Easy Learning Objective: 1 3. The net realizable value (NRV) of a product is its sales revenue less all allocated costs. FALSE AICPA FN: Measurement Difficulty: Medium Learning Objective: 1 4. The net realizable value (NRV) us a measure of a product's contribution to profit before the split-off-point. FALSE AICPA FN: Measurement Difficulty: Medium Learning Objective: 2 9-1
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Chapter 09 - Joint-Process Costing 5. Joint costs are irrelevant in a sell-or-process-further decision. TRUE AICPA FN: Decision making Difficulty: Easy Learning Objective: 2 6. Costs incurred before the split-off point should be allocated to products according to sales revenue to determine whether products should be sold at the split-off point or processed further. FALSE AICPA FN: Decision making AICPA FN: Measurement Difficulty: Medium Learning Objective: 2 7. Joint costs should never be allocated to final products, since they cannot be easily identified as to which product caused the cost. FALSE AICPA FN: Measurement Difficulty: Medium Learning Objective: 2 8. Allocated joint costs may make some products appear unprofitable even if they have positive sales value after split off. TRUE AACSB: Reflective Thinking AICPA FN: Decision making AICPA FN: Measurement Difficulty: Medium Learning Objective: 2 9-2
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Chapter 09 - Joint-Process Costing 9. Only the revenues from selling or processing a product beyond the split-off-point and any expenditures from additional processing are relevant factors in deciding whether to process a product beyond the split-off point. TRUE AACSB: Reflective Thinking AICPA FN: Decision making AICPA FN: Measurement Difficulty: Medium Learning Objective: 2 10. Manufacturing companies are required to use joint-cost allocation for both financial accounting and tax purposes. TRUE AICPA FN: Measurement Difficulty: Medium Learning Objective: 3 11. Determining exactly how much of a joint product resource is used by any of the joint products is impossible. TRUE AICPA FN: Measurement Difficulty: Medium Learning Objective: 3 12. Because joint-cost allocation is always arbitrary, it is excluded from consideration in determining casualty losses for insurance purposes. FALSE AICPA FN: Measurement Difficulty: Medium Learning Objective: 3 9-3
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Chapter 09 - Joint-Process Costing 13. By-products are outputs from a joint production process that are minor in quantity and/or net realizable value when compared to main products.
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