Reference no: EM132742270

Problem 1: Which of the following is not an acceptable method of accounting for by-products?

a. The revenue from the sale of by-products is credited to "Other Income."

b. The by-product is valued at its opportunity costs of purchasing or replacing the product.

c. The revenue from the sale of by-products is deducted from the costs of the main products.

d. The by-product is valued at a standard price; any fluctuations in the price are isolated in a variance account.

e. All of the above methods are acceptable approaches to accounting for by-products.

Problem 2: If normal spoilage is detected at an inspection point within the process (rather than at the end), the cost of that spoilage should be

a. included with the cost of the units sold during the period.

b. included with the cost of the units completed in that department during the period.

c. allocated to ending work in process units and units transferred out based on their relative values.

d. allocated to the good units that have passed the inspection point

Problem 3: Normal spoilage units resulting from a continuous process

a. are extended to the EUP schedule.

b. result in a higher unit cost for the good units produced.

c. result in a loss being incurred.

d. cause estimated overhead to increase.