Use the Following Information for the Next 8 Questions

question 3

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 physical output method?

• A) Floor cushions and sofa cushions
• B) Floor cushions and full-body pillows
• C) Standard pillows and full-body pillows
• D) None of the above

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Definitions:

Cost Of Production Report

A report prepared periodically by a processing department, summarizing (1) the units for which the department is accountable and the disposition of those units and (2) the costs incurred by the department and the allocation of those costs between completed and incomplete production.

Equivalent Units

A concept in process costing that converts partially completed units into an equivalent number of fully completed units to measure output in a consistent way.

Process Costing System

An accounting method used to allocate costs to units of production in continuous processes, suitable for homogenous products.

Work In Process Inventory

The direct materials costs, the direct labor costs, and the applied factory overhead costs that have entered into the manufacturing process but are associated with products that have not been finished.