Use the Following Information for the Next 8 Questions

question 19

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) .
-Joint cost allocations are inappropriate when I. Deciding whether to process a product beyond the split-off point
II. Preparing external financial reports
III. Evaluating the performance of individual project managers

• A) I and II only
• B) I and III only
• C) II and III only
• D) I, II, and III

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Definitions:

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, considering all interest payments and its current price.

Forward Rate

The agreed-upon interest rate for a financial transaction that will take place in the future, mainly used in the context of currencies and bonds.

1-Year Bond

A bond that matures in one year, often used for short-term investment strategies.

Zero-Coupon Bond

A zero-coupon bond is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.