J-M Company Uses a Joint Process Costing $15,000 to Produce

question 80

Multiple Choice

J-M Company uses a joint process costing $15,000 to produce three main products. The company had no beginning inventory. Its current period operation data follow: $\begin{array}{lccccc}&\text { Units }&\text {Sales Value}&\text {Separable }&\text {Sales Value After }&\text {Units }\\\text { Product}&\text { Produced }&\text {at Split-Off }&\text {Costs }&\text {Further Processing }&\text {Sold }\\\hline S & 500 & \$ 5,000 & \$ 500 & \$ 7,000 & 400 \\T & 450 & 6,000 & 650 & 9,000 & 300 \\R & 300 & 9,000 & 700 & 10,000 & 250\end{array}$ If J-M uses the sales value at split-off point method and sells products at the split-off point, what is the gross profit for product T? Note: the sales values above are based on units produced.

• A) $1,000
• B) $(500)
• C) $1,500
• D) $3,000

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Definitions:

Standard Price

A predetermined price established by a company for a product or service, used for budgeting and cost control purposes.

Unfavourable Variances

Unfavourable Variances are cost or revenue variances that indicate a business is performing worse than its budgeted or planned figures.

Cost of Goods Sold

The total cost of manufacturing and delivering a product to a consumer, including raw materials, labor, and other direct costs associated with production.

Credit Entry

An accounting entry that increases a credit account or decreases a debit account, representing the source of funds or value entry in a financial transaction.