Use the Following Information for the Next 8 Questions

question 5

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 net realizable value method. Which of the following correctly orders the four product lines from greatest allocation to least allocation?

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

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Definitions:

Life Annuity

An insurance product that guarantees regular payments to the annuitant for life, in exchange for an initial investment.

Term Annuity

An insurance product that pays out income over a fixed period or term, not necessarily for life.

Compounded Monthly

This involves the recalculating of interest on a loan or investment by taking into account both the initial principal and the accumulated interest from previous periods, recalculated on a monthly basis.

Life Annuity

A financial product providing a series of payments at regular intervals for the remainder of the annuitant's life.