Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Question
Chapter 16, Problem 16.7Q
To determine
Relative Sales Value at Split off Method:
Relative sales value at split off method allocates joint cost on the basis of sum total of sales value at the split off point.
Net Realizable Value (NRV) Method:
NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.
To identify: Situation where NRV method can be used but not sales value at split off method.
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Students have asked these similar questions
V4. Give two limitations of the physical measure method of a joint -cost allocation.
Distinguish between the sales volume at split off method and the NRV method.
Allocating costs for joint products can be done by:
a. Sales Value Approach
b. Contribution Margin Approach
C. All Approaches are correct.
d. Comparative Income Approach
Explain why using cost as a transfer price is inappropri-ate when the center producing the product is evaluated as a
profit center.
Chapter 16 Solutions
Cost Accounting (15th Edition)
Ch. 16 - Give two examples of industries in which joint...Ch. 16 - What is a joint cost? What is a separable cost?Ch. 16 - Distinguish between a joint product and a...Ch. 16 - Why might the number of products in a joint-cost...Ch. 16 - Provide three reasons for allocating joint costs...Ch. 16 - Why does the sales value at splitoff method use...Ch. 16 - Prob. 16.7QCh. 16 - Distinguish between the sales value at splitoff...Ch. 16 - Give two limitations of the physical-measure...Ch. 16 - How might a company simplify its use of the NRV...
Ch. 16 - Why is the constant gross-margin percentage NRV...Ch. 16 - Managers must decide whether a product should be...Ch. 16 - Prob. 16.13QCh. 16 - Describe two major methods to account for...Ch. 16 - Why might managers seeking a monthly bonus based...Ch. 16 - Prob. 16.16ECh. 16 - Prob. 16.17ECh. 16 - Prob. 16.18ECh. 16 - Prob. 16.19ECh. 16 - Prob. 16.20ECh. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Joint costs and decision making. Jack Bibby is a...Ch. 16 - Joint costs and byproducts. (W. Crum adapted)...Ch. 16 - Prob. 16.27PCh. 16 - Prob. 16.28PCh. 16 - Prob. 16.29PCh. 16 - Prob. 16.30PCh. 16 - Prob. 16.31PCh. 16 - Prob. 16.32PCh. 16 - Prob. 16.33PCh. 16 - Prob. 16.34PCh. 16 - Prob. 16.35PCh. 16 - Prob. 16.36PCh. 16 - Methods of joint-cost allocation, comprehensive....
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- 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 methodarrow_forwardWhich of the following is NOT considered in cost-volume-profit analysis? Variable costs Fixed costs Opportunity costs Mixed costsarrow_forwardA price that can't be quickly or efficiently linked to a cost object is referred to as: Additional charges may apply. The total cost Costs incurred indirectly Cost of conversion.arrow_forward
- Define the term net realizable value, and explain how this concept can be used to allocate joint costs.arrow_forward“Cost and price information play no role in negotiated transfer prices.” Do you agree? Explain.arrow_forwardThe simplifying assumption that costs and volume vary in straight-line relationships makes the analysis of cost behav-ior much easier. What factors make this a reasonable and useful assumption in many cases?arrow_forward
- Which of the following choices correctly denotes the data needed to allocate joint costs under the relative-sales-value method? Sales Value of Product at Split-Off Separable Cost Sales Value of Product After Processing Beyond Split-Off A. Yes Yes No B. Yes Yes Yes C. Yes No No D. No Yes Yes E. No No Yes Choice A Choice D Choice C Choice B Choice Earrow_forwardThis transfer prices basis is considered to be the most inferior one a. variable cost transfer pice b. full cost transfer price c. negotiatied transfer price d. external market transfer price e. dual transfer pricearrow_forwardWhy would standard cost be a more appropriate transfer cost between cost centers than actual cost?arrow_forward
- A transfer pricing arrangement that uses the price that would be charged to an external customer is a______. A. market-based approach B. negotiated approach C. cost approach D. decentralized approacharrow_forwardWhat advantage does the FIFO cost method have over the average cost method relative to providing information for cost control?arrow_forwardWhich of the following is the most commonly used method for assignment of joint costs? a. Relative sales value b. Split-off method c. Average production cost d. Relative percentage of direct costs basisarrow_forward
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