If a Company Produces Two Products, a and B, from a Joint

question 46

Multiple Choice

If a company produces two products, A and B, from a joint process, and B requires additional processing after the split-off in order to be salable, how is the joint cost allocated to B determined?

• A)The costs of the additional processing are ignored in allocating joint costs.
• B)The costs of the additional processing are subtracted from the joint costs allocated to B.
• C)The relative sales value used to allocate the joint cost are determined after the costs of further processing are subtracted from the ultimate sales value of B.
• D)None of these are correct.

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Definitions:

Bank

A financial institution licensed to receive deposits and make loans, in addition to offering various other financial services.

Electronic Funds Transfer

A digital transaction method where money is transferred from one account to another without the physical exchange of cash.

Drawer

A compartment for holding or storing items, or in financial terms, the person who writes a bill of exchange or check.

Payee

The party to whom payment of a promissory note is to be made.