Question

The following statement is NOT true with regard to Joint costs: Select one: a. A by-product has a relatively small physical value compared with the total production output. b. None of all c. The split-off point occurs where the products become separately identifiable. d. Both the main product(s) and the by- product(s) may need further processing before they are in a saleable condition. e. Joint costs are the costs incurred when two or more products arise simultaneously from the same production process.

Answer 1

Question 1:

Answer:

Option D: Both the main product(s) and the by-product(s) may need further processing before they are in a salable condition.

Explanation:

• Option A is incorrect because the statement a by-product has a relatively small physical value compared with the total production output is entirely correct.
• Option B is incorrect because option D is a correct answer.
• Option C is incorrect because the statement the split-off point occurs where the products become separately identifiable is entirely correct.
• Option D is correct because both main product(s) and the by-product(s) may need further processing before they are in a salable condition is entirely wrong. only main product may need further processing after the split off point.
• Option E is incorrect because the statement joint costs are the costs incurred when two or more products arise simultaneously from the same production process is entirely correct.

Question :

Answer:

Option C: Absorption method

Explanation:

• Option A is incorrect because option C absorption cost method is incorrect.
• Option B is incorrect because Equation method is used for calculating Break-even point. here the break-even point is calculated using the formula:

SP = VC + FC where SP = Sales Price, VC = Variable Costs, FC = Fixed cost

SP – VC – FC = 0 (Break-even Point).

• Option C is correct because Absorption cost method is not a method for calculating break-even point. It is a method for accumulating cost associated with a production process
• Option D is incorrect because graph method because Break-even point or Cost-volume-profit relationship can be presented through the use of graphs.
• Option E is incorrect because we can also compute the break-even point by using contribution methods.we use the following formula for calculating Break-even point.

B.E Point = Fixed Costs / C.M per unit