HGT Corporation Produces Four Products from a Common Production Process

question 35

Multiple Choice

HGT Corporation produces four products from a common production process. Selected data from HGT's accounting system for the four products appears below: Joint costs for the accounting period totalled $5,000. Each product line has a different product manager who is evaluated based on product line profitability. Therefore each manager is motivated to reduce his / her total product line costs as much as possible. The managers have been given information about potential joint cost allocations using the following three methods: physical output, sales at split-off point, and net realizable value. The managers are comparing the joint cost allocations under each method so that they can give the accountant input about their preferred method(s) .
If HGT allocates joint costs using net realizable value method, the total joint cost allocated to floor cushions will be:

• A) $570
• B) $720
• C) $420
• D) $563

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Definitions:

Promoting

The act of creating awareness, generating interest, and increasing sales for a product or service through various marketing techniques.

Spyware

Software that is secretly installed on a computer without the user's consent with the purpose of monitoring user actions and collecting personal data.

Shirking

The act of avoiding or evading work responsibilities, often by doing less work or being less productive.

Performance Measures

Quantitative indicators used to evaluate the efficiency, effectiveness, and quality of an organization's activities.