Jordan, Inc If Jordan Uses the Sales Value at Split-Off Point Method

question 14

Multiple Choice

Jordan, Inc. produces 2 products from a joint process costing $24,000. The results from the most recent period follow: $\begin{array}{lcccc}&&\text { Sales Value }&\text {Separable}&\text { Sales Value After }\\\text { Product }&\text { Tons }&\text {at Split-Off } &\text { Costs }& \text { Further Processing }\\ \text { Alpha-1 } & 800 & \$ 10,000 & \$ 12,000 & \$ 24,000 \\\text { Alpha-2 } & 400 & 8,000 & 4,000 & 20,000 \\\text { Waste } & 200 & -- & --- & --\end{array}$

If Jordan uses the sales value at split-off point method to allocate joint costs, the cost per ton for Alpha-1 would be:

• A) $15
• B) $32
• C) $28
• D) $29

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Definitions:

Operating Cash Flow

The amount of cash generated by a company's normal business operations, used to assess the company's ability to generate sufficient positive cash flow to maintain and grow its operations.

Net Working Capital

Net working capital is a measure of a company's liquidity, operational efficiency, and short-term financial health, calculated as current assets minus current liabilities.

Top-Down Approach

An investment strategy that starts with global economics before identifying specific sectors and companies for investment.

Operating Cash Flow

An indicator of the money produced through the regular business activities of a company.