Delite Confectionary Company Produces Various Types of Candies -
the Joint Processing Costs in This Operation:
A) Should

question 102

Multiple Choice

Delite Confectionary Company produces various types of candies. Several candies could be sold at the split-off point or processed further and sold in a different form after further processing. The candies are produced in a joint processing operation with $500,000 of joint processing costs monthly, which are allocated based on pounds produced. Information concerning this process for a recent month appears below:
$\begin{array}{lr}&&&\text {Further}&\text {Price after}\\&\text { Number of }&\text {Price per pound at }&\text {processing }&\text {processing }\\\text { Candy type } &\text { pounds }&\text { split-off } &\text { costs } &\text { further }\\\text { Sweet Meats } & 50,000&\$8&\$75,000&\$10.00 \\\text { Chocolate } & 100,000&\$10&\$30,000&\$10.50 \\\text { Delight } & \\\text { Minty Wonders } & 25,000&\$5&\$20,000&\$5.50\end{array}$
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The joint processing costs in this operation:

• A) Should be allocated to products to determine whether they are sold at split-off or processed further.
• B) Should be ignored in determining whether to sell at split-off or process further.
• C) Should be ignored in making all product decisions.
• D) Are never included in product cost, as they are misleading to all management decisions.

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Definitions:

Activity Variance

The difference between budgeted and actual activity levels, often analyzed in cost accounting and performance management.

Cleaning Equipment

Assets such as vacuums, mops, and detergents used in maintaining tidiness and hygiene standards at a workplace or production facility.

Cost Formula

An equation or calculation that determines the total cost of producing goods or services, often including factors like labor, materials, and overhead.

Flexible Budget

A financial plan that changes in accordance with alterations in activity volume or intensity.