Use the Information Below to Answer the Following Question(s)

question 25

Multiple Choice

Use the information below to answer the following question(s) .Chem Manufacturing Company processes direct materials up to the splitoff point, where two products (X and Y) are obtained and sold.The following information was collected for the month of November.Direct materials processed:
10,000 litres (10,000 litres yield 9,500 litres of good product and 500 litres of shrinkage)
The cost of purchasing 10,000 litres of direct materials and processing it up to the splitoff point to yield a total of 9,500 litres of good products was $975,000.The beginning inventories totalled 50 litres for X and 25 litres for Y.Ending inventory amounts reflected 300 litres of product X and 525 litres of product Y.October costs were per unit were the same as November.
-If joint products end up with the same gross margin percentage, which of the following is TRUE?

• A)The cost allocation method assigned the same cost per unit to each product.
• B)The physical measure method must have been used.
• C)The gross margin percentage NRV method must have been used.
• D)The estimated net realizable method must have been used.
• E)If all products are sold at the splitoff point, and there were no opening inventories, the sales value at splitoff method could have been used.

---

Definitions:

Retail Method

An inventory valuation method used in retail, estimating inventory costs based on the relationship between the cost and retail price of goods.

Inventory Costing

A method used to value inventory, determining the cost of goods sold and remaining inventory value.

Markup

The amount added to the cost of goods to cover expenses and generate profit, usually expressed as a percentage of the cost.

Physical Inventory

The process of counting and verifying the actual quantities of merchandise or goods in stock, typically performed at the end of an accounting period.