Use the Following Information for the Next 8 Questions

question 130

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) .
-Assume HGT allocates joint costs using the physical output method. Which of the following correctly orders the four product lines from greatest allocation to least allocation?

• A) Sofa cushions, standard pillows, floor cushions, full-body pillows
• B) Full-body pillows, standard pillows, floor cushions, sofa cushions
• C) Full-body pillows, standard pillows, sofa cushions, floor cushions
• D) Floor cushions, sofa cushions, standard pillows, full-body pillows

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Definitions:

Functional Currency

The currency of the primary economic environment in which an entity operates, typically used in its financial reporting.

Foreign Currency Transaction

A transaction that is denominated or requires settlement in a foreign currency.

Denominated

Indicates the unit of currency in which a financial transaction or instrument is specified.

FOB

Free On Board (FOB) is an international commerce term used to indicate whether the seller or buyer is responsible for goods damaged or destroyed during shipping, specifying the point at which the risk of loss shifts.