In Regard to Joint Cost Allocation, the "Split-Off Point" Is

question 85

Multiple Choice

In regard to joint cost allocation, the "split-off point" is:

• A) Not acceptable when using the value basis for allocating joint costs.
• B) The point at which some products are sold and some remain in inventory.
• C) The point at which separate products can be identified.
• D) A physical basis method to allocate costs based on ratio of some physical characteristic.
• E) The difference between the actual and market value of joint costs.

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Definitions:

Variable Costing

A costing method that includes only variable production costs (costs that vary with output) in the cost of goods sold and excludes fixed overhead costs.

Variable Costing

A costing method that includes only variable production costs (materials, labor, and variable manufacturing overhead) in product costs, excluding fixed overhead.

Net Operating Income

The company's profit remaining after operating costs are removed, but prior to the deduction of taxes and interest.

Fixed Manufacturing Overhead

Fixed manufacturing overhead includes the costs associated with manufacturing that do not vary with the level of production, such as rent, salaries, and utility costs.