Hairell Company Produces Three Products from a Joint Process

question 60

Multiple Choice

Hairell Company produces three products from a joint process.The products can be sold at split-off or processed further.In deciding whether to sell at split-off or process further,management should

• A)allocate the joint cost to the products based on relative sales value prior to making the decision.
• B)allocate the joint cost to the products based on a physical quantity measure prior to making the decision.
• C)subtract the joint cost from the total sales value of the products before determining relative sales value and making the decision.
• D)ignore the joint cost in making the decision.

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Definitions:

After-Tax Discount Rate

The interest rate used in discounted cash flow analysis that accounts for the impact of taxes on the rate of return.

Income Tax Rate

The share of an individual's earnings that is paid to the government as a tax.

Straight-Line Depreciation

Straight-line depreciation is a method of calculating the depreciation expense of an asset evenly over its useful life.

Straight-Line Depreciation

A technique for determining an asset's depreciation, presuming that the asset will depreciate by a consistent value annually throughout its projected useful life.