DE LASALLE UNIVERSITY-MANILA

RVR COB Department of Accountancy

MODCOS2
Answer Key - Quiz 3

D ir e c tio n :
True or False: Write the word TRUE if the statement is correct; Write the word FALSE if the
statement is incorrect.
Multiple-Choice: Choose the best answer among the given choices.
Problem Solving: Show your solution in good form using your 10-column worksheet.
TRUE OR FALSE
1 . Jo in t c o sts a re in c u rre d b e y o n d th e s p lito ff p o in t a n d a re a s sig n a b le to in d iv id u a l p ro d u c ts .
Answer: FALSE
E x p la n a tio n : Jo in t c o sts a re in c u rre d p rio r to th e sp lito ff.
2 . S e p a ra b le c o s ts a re in c u rre d b e y o n d th e sp lito ff p o in t th a t a re a ssig n a b le to e a c h o f th e
sp e c ific p ro d u c ts id e n tifie d a t th e sp lito ff p o in t.
Answer: TRUE
3 . S e p a ra b le c o sts in c lu d e m a n u fa c tu rin g c o sts o n ly .
Answer: FALSE
E x p la n a tio n : S e p a ra b le c o sts in c lu d e m a n u fa c tu rin g , m a rk e tin g , d istrib u tio n , a n d o th e r
c o sts.
4 . Jo in t c o sts a re
sim u lta n e o u sly .
Answer: TRUE

th e

c o sts

of

p ro d u c tio n

p ro c e s s

th a t

y ie ld s

m u ltip le

p ro d u c ts

5 . A t o r b ey o n d th e sp lito ff p o in t, d e c isio n s re la tin g to th e sa le o r fu rth e r p ro c e ssin g o f e a c h

id e n tifia b le p ro d u c t c a n b e m a d e in d e p e n d e n tly o f d e c isio n s a b o u t th e o th e r p ro d u c ts.
Answer: TRUE
6 . If th e v a lu e o f a jo in t p ro d u c t d ro p s sig n ific a n tly , it c o u ld a lso b e v ie w e d a s a b y p ro d u c t
Answer: TRUE
7 . L itig a tio n m a y b e a re a so n th a t jo in t c o sts a re a llo c a te d to in d iv id u a l p ro d u c ts.
Answer: TRUE
8 . T h e sa le s v a lu e a t sp lito ff m e th o d e n a b le s th e a c c o u n ta n t to o b ta in in d iv id u a l p ro d u c t c o sts
a n d g ro ss m a rg in s.
Answer: TRUE
9 . T h e e stim a te d n e t re a liz a b le v a lu e m e th o d is u se d w h e n th e m a rk e t se llin g p ric e s a t th e
sp lito ff p o in t a re N O T a v a ila b le .
Answer: TRUE
1 0 . T h e n e t re a liz a b le v a lu e (N R V ) m e th o d a llo c a te s jo in t c o sts to jo in t p ro d u c ts p ro d u c e d
d u rin g th e a c c o u n tin g p e rio d o n th e b a sis o f th e ir re la tiv e N R V fin a l s a le s v a lu e p lu s
se p a ra b le c o s ts .
Answer: FALSE
E x p la n a tio n : T h e n e t r e a liz a b le v a lu e (N R V ) m e th o d a llo c a te s jo in t c o sts to jo in t
p ro d u c ts p ro d u c e d d u rin g th e a c c o u n tin g p e rio d o n th e b a sis o f th e ir re la tive N R V fin a l
sa le s v a lu e m in u s se p a ra b le c o sts.
MULTIPLE-CHOICE

1 . In jo in t c o stin g :
a . c o sts a re a ssig n e d to in d iv id u a l p ro d u c ts a s a sse m b ly o f th e p ro d u c t o c c u rs
b . c o sts a re a ssig n e d to in d iv id u a l p ro d u c ts a s d isa sse m b ly o f th e p ro d u c t o c c u rs
c . a sin g le p ro d u c tio n p ro c e ss y ie ld s tw o o r m o re p ro d u c ts
d . B o th B a n d C a re c o rre c t.
Answer: D
2 . T h e _ _ _ _ _ _ _ _ p o in t is th e ju n c tu re in a jo in t p ro d u c tio n p ro c e ss w h e n tw o o r m o re
p ro d u c ts b e c o m e se p a ra te ly id e n tifia b le .

a . sp lito ff
b . jo in t p ro d u c t
c . p ro c e ss
d. end
Answer: A
3 . T h e fo c u s o f jo in t c o s tin g is o n a llo c a tin g c o s ts to in d iv id u a l p ro d u c ts :
a . b e fo re th e sp lito ff p o in t
b . a fte r th e sp lito ff p o in t
c . a t th e sp lito ff p o in t
d . a t th e e n d o f p ro d u c tio n
Answer: C
4 . B y p ro d u c ts a n d m a in p ro d u c ts a re d iffe re n tia te d b y th e :
a . n u m b e r o f u n its p e r p ro c e ssin g p e rio d
b . w e ig h t o r v o lu m e o f o u tp u ts p e r p e rio d
c . a m o u n t o f to ta l sa le s v a lu e
d . N o n e o f th e s e a n s w e rs is c o rre c t.
Answer: C
5 . A ll o f th e fo llo w in g c h a n g e s m a y in d ic a te a c h a n g e in p ro d u c t c la s s ific a tio n o f a
m a n u fa c tu rin g p ro c e ss w h ic h h a s a sp lito ff p o in t E X C E P T a :
a . b y p ro d u c t in c re a se s in sa le s v a lu e d u e to a n e w a p p lic a tio n
b . m a in p ro d u c t b e c o m e s a jo in t p ro d u c t
c . m a in p ro d u c t b e c o m e s te c h n o lo g ic a lly o b so le te
d . b y p ro d u c t lo se s its m a rk e t d u e to a n e w in v e n tio n
Answer: B
6 . W h ic h o f th e fo llo w in g sta te m e n ts is tru e re g a rd in g m a in p ro d u c ts a n d b y p ro d u c ts?
a . P ro d u c t c la s sific a tio n s d o n o t c h a n g e o v e r th e s h o rt ru n .
b . P ro d u c t c la s sific a tio n s d o n o t c h a n g e o v e r th e lo n g ru n .
c . P ro d u c t c la s sific a tio n s m a y c h a n g e o v e r tim e .
d . T h e c a u se -a n d -e ffe c t c rite rio n d e te rm in e s th e c la ssific a tio n .
Answer: C
7 . P ro p e r c o sts a llo c a tio n fo r in v e n to ry c o stin g a n d c o st-o f-g o o d s-so ld c o m p u ta tio n s a re
im p o rta n t b e c a u se :
a . in v e n to ry c o stin g is e sse n tia l fo r p ro p e r b a la n c e sh e e t p re se n ta tio n
b . m o st sta te s h a v e la w s re q u irin g p ro p e r b a la n c e sh e e t p re se n ta tio n a n d re c o m m e n d e d
a llo c a tio n m e th o d s
c . c o st o f g o o d s so ld is a n im p o rta n t c o m p o n e n t in th e d e te rm in a tio n o f n e t in c o m e
d . B o th A a n d C a re c o rre c t.
Answer: D
8 . A ll o f th e fo llo w in g m e th o d s m a y b e u s e d to a llo c a te jo in t c o sts E X C E P T th e :
a . c o n sta n t g ro ss -m a rg in p e rc e n ta g e m e th o d
b . e stim a te d n e t re a liz a b le v a lu e m e th o d
c . p re se n t v a lu e a llo c a tio n m e th o d
d . sa le s v a lu e a t s p lito ff m e th o d
Answer: C
9 . T h e sa le s v a lu e a t sp lito ff
a . a llo c a te s jo in t c o sts to
sp lito ff p o in t
b . a llo c a te s jo in t c o sts to
th e sp lito ff p o in t
c . a llo c a te s jo in t c o sts to
d . a llo c a te s jo in t c o sts to
m a rg in p e rc e n ta g e
Answer: A

m e th o d :
jo in t p ro d u c ts o n th e b a sis o f th e re la tiv e to ta l sa le s v a lu e a t th e
jo in t p ro d u c ts o n th e b a sis o f a c o m p a ra b le p h y sic a l m e a su re a t
jo in t p ro d u c ts o n th e b a sis o f re la tiv e N R V
jo in t p ro d u c ts in a w a y th a t e a c h p ro d u c t h a s a n id e n tic a l g ro ss -

1 0 . T h e p h y sic a l-m e a su re m e th o d :
a . a llo c a te s jo in t c o sts to jo in t p ro d u c ts in a w a y th a t e a c h p ro d u c t h a s a n id e n tic a l g ro ss m a rg in p e rc e n ta g e
b . a llo c a te s jo in t c o sts to jo in t p ro d u c ts o n th e b a sis o f a c o m p a ra b le p h y sic a l m e a su re a t
th e sp lito ff p o in t
c . a llo c a te s jo in t c o sts to jo in t p ro d u c ts o n th e b a sis o f th e re la tiv e sa le s v a lu e a t th e
sp lito ff p o in t

d . a llo c a te s jo in t c o sts to jo in t p ro d u c ts o n th e b a sis o f re la tiv e N R V

Answer: B
1 1 . T h e b e n e fits -re c e iv e d c rite ria fo r a llo c a tin g jo in t c o sts in d ic a te m a rk e t-b a se d m e a su re s a re
p re fe rre d b e c a u se :
a . p h y sic a l m e a su re s su c h a s v o lu m e a re a c le a re r b a sis fo r a llo c a tin g c o st th a n o th e r
m e a su re s
b . o th e r m e a su re s a re m o re d iffic u lt to c a lc u la te
c . re v e n u e s a re u su a lly th e b e st in d ic a to r o f th e b e n e fits re c e iv e d
d . N o n e o f th e s e a n s w e rs is c o rre c t.
Answer: C
1 2 . W h ic h o f th e fo llo w in g is a D IS A D V A N T A G E o f th e p h y sic a l-m e a su re m e th o d o f
a llo c a tin g jo in t c o sts?
a . T h e m e a su re m e n t b a sis fo r e a c h p ro d u c t m a y b e d iffe re n t.
b . T h e n e e d fo r a c o m m o n d e n o m in a to r.
c . T h e p h y sic a l m e a su re m a y n o t re fle c t th e p ro d u c t's a b ility to g e n e ra te re v e n u e s.
d . A ll o f th e s e a n s w e rs a re c o rre c t.
Answer: D
1 3 . W h y d o a c c o u n ta n ts c ritic iz e th e p ra c tic e o f c a rry in g in v e n to rie s a t e stim a te d n e t
re a liz a b le v a lu e s?
a . T h e c o sts o f p ro d u c in g th e p ro d u c ts a re u su a lly e stim a te s.
b . T h e re is u su a lly n o c le a rly d e fin e d re a liz a b le v a lu e fo r th e se in v e n to rie s.
c . T h e e ffe c t o f th is p ra c tic e is to re c o g n iz e in c o m e b e fo re sa le s a re m a d e .
d . A ll o f th e s e a n s w e rs a re c o rre c t.
Answer: C
1 4 . T h e c o n sta n t g ro ss -m a rg in p e rc e n ta g e N R V m e th o d o f jo in t c o st a llo c a tio n :
a . in v o lv e s a llo c a tin g c o sts in su c h a w a y th a t m a in ta in in g th e sa m e g ro ss m a rg in
p e rc e n ta g e fo r e a c h p ro d u c t th a t w a s o b ta in e d in p rio r y e a rs
b . in v o lv e s a llo c a tin g c o sts in su c h a w a y th a t th e o v e ra ll g ro ss m a rg in p e rc e n ta g e is
id e n tic a l fo r th e in d iv id u a l p ro d u c ts
c . is th e sa m e a s th e e stim a te d N R V m e th o d
d . is th e sa m e a s th e sa le s -v a lu e a t sp lito ff m e th o d
Answer: B
1 5 . A re a s o n w h y a p h y s ic a l-m e a su re to a llo c a te jo in t c o sts is le ss p re fe rre d th a n th e sa le s
v a lu e a t sp lito ff is:
a . a p h y sic a l m e a su re su c h a s v o lu m e is d iffic u lt to e stim a te b e c a u se o f sh rin k a g e
b . p h y sic a l v o lu m e u su a lly h a s little re la tio n sh ip to th e re v e n u e p ro d u c in g p o w e r o f
p ro d u c ts
c . a p h y sic a l m e a su re u su a lly re su lts in th e c o sts b e in g a llo c a te d to th e p ro d u c t th a t
w e ig h s th e m o s t
d . A ll o f th e s e a n s w e rs a re c o rre c t.
Answer: D
P R O B L E M S O L V IN G
P r o b le m 1 ( 6 p o i n t s )
T h e C a ro lin a C o m p a n y p re p a re s lu m b e r fo r c o m p a n ie s w h o m a n u fa c tu re fu rn itu re . T h e m a in
p ro d u c t is fin ish e d lu m b e r w ith a b y p ro d u c t o f w o o d sh a v in g s. T h e b y p ro d u c t is so ld to
p ly w o o d m a n u fa c tu re rs. F o r Ju ly , th e m a n u fa c tu rin g p ro c e ss in cu rre d P 3 3 2 ,0 0 0 in to ta l c o sts.
E ig h ty th o u sa n d b o a rd fe e t o f lu m b e r w e re p ro d u c e d a n d s o ld a lo n g w ith 6 ,8 0 0 p o u n d s o f
sh a v in g s. T h e fin is h e d lu m b e r s o ld fo r P6 .0 0 p e r b o a rd fo o t a n d th e s h a v in g s s o ld fo r P 0 .6 0 a
p o u n d . T h e re w e re n o b e g in n in g s o r e n d in g in v e n to rie s.
R e q u ir e d :
P re p a re a n in c o m e sta te m e n t s h o w in g th e b y p ro d u c t
1 . a s a c o st re d u c tio n d u rin g p ro d u c tio n , a n d
2 . a s a re v e n u e ite m w h e n so ld .

S o lu tio n :
Cost reduction when
Revenue when sold
Answer:
produced
Sales: Lumber
P480,000
P480,000
Shavings
4,080
Total Sales:
P480,000
P484,080
Cost of Goods Sold:
Total manufacturing costs
P332,000
P332,000
Byproduct
4,080
0
Total COGS
327,920
332,000
Gross Margin
P152,080
P152,080
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _
P r o b le m 2 ( 1 4 p o i n t s )
T h e G o w s C o m p a n y p ro c e s s e s u n p ro c e s s e d g o a t m ilk u p to th e s p lito ff p o in t w h e re tw o
p ro d u c ts, c o n d e n se d g o a t m ilk a n d sk im g o a t m ilk re su lt. T h e fo llo w in g in fo rm a tio n w a s
c o lle c te d fo r th e m o n th o f O c to b e r:
Direct Materials processed:

130,000 gallons (shrinkage was 10%)

Production:

condensed goat milk

skim goat milk

52,200 gallons
64,800 gallons

Sales:

condensed goat milk

skim goat milk

P3.50 per gallon

P2.50 per gallon

T h e c o sts o f p u rc h a sin g th e 1 3 0 ,0 0 0 g a llo n s o f u n p ro c e sse d g o a t m ilk a n d p ro c e ssin g it u p to

th e sp lito ff p o in t to y ie ld a to ta l o f 1 1 7 ,0 0 0 g a llo n s o f sa la b le p ro d u c t w a s P1 4 4 ,4 8 0 . T h e re
w e re n o in v e n to ry b a la n c e s o f e ith e r p ro d u c t.
C o n d e n se d g o a t m ilk m a y b e p ro c e sse d fu rth e r to y ie ld 3 9 ,0 0 0 g a llo n s (th e re m a in d e r is
sh rin k a g e ) o f a m e d ic in a l m ilk p ro d u c t, X y la , fo r a n a d d itio n a l p ro c e ssin g c o st o f P 3 p e r
u sa b le g a llo n . X y la c a n b e so ld fo r P 1 8 p e r g a llo n .
S k im g o a t m ilk c a n b e p ro ce sse d fu rth e r to y ie ld 5 6 ,2 0 0 g a llo n s o f sk im g o a t ic e c re a m , fo r a n
a d d itio n a l p ro c e ss in g c o st p e r u s a b le g a llo n o f P2 .5 0 . T h e p ro d u c t c a n b e so ld fo r P 9 p e r
g a llo n .
T h e re a re n o b e g in n in g a n d e n d in g in v e n to ry b a la n c e s.
1 . W h a t is th e e stim a te d n e t re a liz ab le v a lu e o f X y la a t th e sp lito ff p o in t?
A n s w e r : P 5 8 5 ,0 0 0
2 . W h a t is th e e stim a te d n e t re a liz a b le v a lu e o f th e sk im g o a t ic e c re a m a t th e sp lito ff
p o in t?
A n s w e r : P 3 6 5 ,3 0 0
3 . U s in g e s tim a te d n e t re a liza b le v a lu e , w h a t a m o u n t o f th e P 1 4 4 ,4 8 0 o f jo in t c o sts w o u ld
b e a llo c a te d X y la a n d th e sk im g o a t ic e c re a m ?
A n s w e r : P 8 8 ,9 4 2 a n d P 5 5 ,5 3 8

Sales
Less: Sep cost
Est. NRValue
Weighting
Jt costs allocated

XYLA
Skim Goat
Total
39,000 P18 = P702,000 56,200 P9 = P505,800 P1,207,800
56,200 P2.50 =
39,000 P3 = P 117,000
P140,500
P585,000
P365,300 P950,300
.6156
.3844
P144,480 .6156 =
P144,480 .3844 =
P88,942
P55,538

4 . U s in g th e s a le s v a lu e a t s p lito ff m e th o d , w h a t is th e g ro s s-m a rg in p e rc e n ta g e fo r
c o n d e n se d g o a t m ilk a t th e s p lito ff p o in t?
A n s w e r : 5 8 .1 %
5 . U s in g th e s a le s v a lu e a t s p lito ff m e th o d , w h a t is th e g ro s s-m a rg in p e rc e n ta g e fo r sk im
g o a t m ilk a t th e sp lito ff p o in t?
A n s w e r : 5 8 .1 %
Condensed Goat Milk
52,200 P3.50 =
P182,700
P182,700/P344,700 =
0.53

Skim Goat Milk

64,800 P2.50 =
P162,000
P162,000/P344,700 =
0.47

P144,480 .53 = P76,574

P144,480 .47 =
P67,906

P106,126

P94,094

P106,126/P182,700 =
0.581

P94,094/P162,000 =
0.581

Revenues
Percentage

Joint costs
Gross margin
GM percentage

Total
P344,700

6 . H o w m u c h (if a n y ) e x tra in c o m e w o u ld M o rto n e a rn if it p ro d u c e d a n d s o ld a ll o f th e

X y la fro m th e c o n d e n s e d g o a t m ilk ? A llo c a te jo in t p ro c e s s in g c o s ts b a s e d u p o n re la tiv e
sa le s v a lu e o n th e s p lito ff. (E x tra in c o m e m e a n s in c o m e in e x c e s s o f w h a t M o rto n
w o u ld h a v e e a rn e d fro m s e llin g c o n d e n s e d g o a t m ilk .)
A n s w e r : P 4 0 2 ,3 0 0
7 . H o w m u c h (if a n y ) e x tra in c o m e w o u ld M o rto n e a rn if it p ro d u c e d a n d s o ld s k im m ilk
ic e c re a m fro m g o a ts ra th e r th a n g o a t sk im m il k ? A llo c a te jo in t p ro c e ssin g c o sts b a se d
u p o n th e re la tiv e sa le s v a lu e a t th e sp lito ff p o in t.
Answer: P203,300

Revenue
Joint costs
Process costs
Revenue (net)
Gross margin
Difference

Condensed Goat Milk

P702,000
(76,574)
(P3 39,000) =
(117,000)
508,426
(106,126)
P402,300

Skim Goat Milk

P505,800
(67,906)
(P2.50 56,20000) =
(140,500)
297,394
(94,094)
P203,300

____________________________________________________________________________________________
P r o b le m 3 ( 4 . 5 p o i n t s )

C a la m a ta C o rp o ra tio n p ro c e sse s a sin g le m a te ria l in to th re e se p a ra te p ro d u c ts A , B , a n d C .
D u rin g S e p te m b e r, th e jo in t c o s ts o f p ro c e s s in g w e re P3 0 0 ,0 0 0 . P ro d u c tio n a n d sa le s v a lu e
in fo rm a tio n fo r th e m o n th w e re a s fo llo w s:
Product
A
B
C

Units
Produced
10,000
15,000
12,500

Final Sales
Value per Unit
P25
30
24

Separable
Costs
P125,000
250,000
125,000

Required:
Determine the amount of joint cost allocated to each product if the constant gross-margin percentage NRV method
is used.

Solution:
The gross margin percentage is 20% (P1,000,000-P800,000)/P1,000,000
Total
Final Sales
Less Gross
Production
Less Separable Joint Costs
Product Value
Margin
Costs
Costs
Allocated
A
P 250,000
P50,000
P 200,000
P 125,000
P 75,000
B
450,000
90,000
360,000
250,000
110,000
C
300,000
60,000
240,000
125,000
115,000
Total
P1,000,000
P 200,000
P800,000
P500,000
P 300,000
_____________________________________________________________________________________________
P r o b le m 4 ( 6 p o i n t s )
R e d S a u c e C a n n in g C o m p a n y p ro c e sse s to m a to e s in to c a tsu p , to m a to ju ic e , a n d c a n n e d
to m a to e s. D u rin g th e su m m e r o f 2 0 0 5 , th e jo in t c o sts o f p ro c e ssin g th e to m a to e s w e re
P 4 2 0 ,0 0 0 . T h e re w a s n o b e g in n in g o r e n d in g in v e n to rie s fo r th e su m m e r. P ro d u c tio n a n d sa le s
v a lu e in fo rm a tio n fo r th e su m m e r is a s fo llo w s:
Product
Catsup
Juice
Canned

Sales Value at
Separable Costs Selling Price
Splitoff Point
100,000
P6 per case
P3.00 per case
P28 per case
150,000
8 per case
5.00 per case
25 per case
200,000
5 per case
2.50 per case
10 per case

Cases

Required:
Determine the amount allocated to each product if the estimated net realizable value method is used and compute
the cost per case for each product.
Solution:
Product
Catsup
Juice
Canned

Expected Sales
Value
P2,800,000
3,750,000
2,000,000

Separable Net Realizable

Percentage
Costs
Value
P300,000
P2,500,000
35.71
750,000
3,000,000
42.86
500,000
1,500,000
21.43

Totals

P7,000,000

Product Percentage
Catsup
Juice
Canned

Joint Costs Allocated

35.71% P420,000 = P149,982 +

42.86% 420,000 = 180,012 +
21.43% 420,000 =
90,006 +

100.00

Separable
Product Costs
Costs
P300,000 =
P449,982
750,000 =
930,012
500,000 =
590,006

Catsup cost per case

= P449,982/100,000 = P4.50
Juice cost per case
= P930,012/150,000 = P6.20
Canned cost per case = P590,006/200,000 = P2.95
_____________________________________________________________________________________________
P r o b le m 5 ( 4 . 5 p o i n t s )

Z e n o n C h e m ic a l, In c ., p ro c e sse s p in e ro sin in to th re e p ro d u c ts: tu rp e n tin e , p a in t th in n e r, a n d
sp o t re m o v e r. D u rin g M a y , th e jo in t c o s ts o f p ro c e s s in g w e re P 2 4 0 ,0 0 0 . P ro d u c tio n a n d sa le s
v a lu e in fo rm a tio n fo r th e m o n th is a s fo llo w s:
Product
Turpentine
Paint thinner
Spot remover

Units
Produced
6,000 liters
6,000 liters
3,000 liters

Sales Value at
Splitoff Point
P60,000
50,000
25,000

Required:
D e te rm in e th e a m o u n t o f jo in t c o s t a llo c a te d to e a c h p ro d u c t if th e p h y s ic a l-m e a su re m e th o d
is u se d .

Solution:
Product
Turpentine
Paint thinner
Spot remover
Totals

Units Produced
Percentage
Joint Costs
Allocated
6,000 liters
40
P240,000 =
P96,000
6,000 liters
40
240,000 =
96,000
3,000 liters
20
240,000 =
48,000
15,000

100

P240,000

______________________________________END OF QUIZ 3___________________________________