Use the Following Information for the Next 8 Questions

question 132

Multiple Choice

Use the following information for the next 8 questions.
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 totaled $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) .
-Which product line would receive the least amount of joint cost under the sales value at the split-off point method?

• A) Floor cushions
• B) Full-body pillows
• C) Sofa cushions and standard pillows
• D) None of the above

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Definitions:

Compounded Quarterly

Refers to the application of the compound interest rate to an investment or loan on a quarterly basis.

Loan Balance

The remaining amount of money that a borrower must pay on a loan at any given time.

Compounded Semi-annually

Interest calculation method where interest is added to the principal twice a year, increasing subsequent interest calculations.

Loan Payment

The amount of money required to be paid back periodically (usually monthly) on a loan, including both principal and interest.