Flashcards
Chapter 11 Flash Cards
Cards in this deck (17)
- 1Approximated net realizable value split-off allocationCertain products must be processed at an additional separate cost beyond the split-off point. Uses simulated NRV’s for the joint products at split-off to calculate the joint cost allocation.
- 2By-ProductAn incidental output of a joint process; Is salable, but its sales value is not substantial enough for management to justify undertaking the joint process; has a higher sales value than scrap.
- 3Joint CostTotal cost incurred for material, labor, and overhead during a joint process.
- 4Joint ProcessOne product line cannot be manufactured without producing others. These process are common in the following industries; food, extractive, agricultural and chemical industries.
- 5Joint ProductThe key outputs of joint process. These products have substantial revenue-generating ability and as such , provide the financial motive for the company entering into the production process.
- 6Net Realizable Value (NRV)Equals to sales value at split-off minus any expected completion and disposal costs. Methods requires all joint products be salable at split-off and considers the costs that must be incurred at split-off to realize the estimated sales value.
- 7Net Realizable Value ApproachReduced joint product cost for the NRV that will be created by the by-product’s sales.
- 8Net Realizable value at split-off allocationA method assigns joint cost based on an inventory valuation amount for the joint products at the split-off point.
- 9Offset ApproachReduces joint product cost for the NRV that will be created by the by-product’s sales.
- 10Other income approachAn easy approach to accounting for byproduct because no value is recognized for the by-product until it is sold.
- 11physical measure allocationa method of allocating a joint cost to products that uses a common physical characteristic as the proration base.
- 12Realized Value ApproachA method of accounting for by product or scrap that does not recognize any value for such product until it is sold; the value recognized upon sale can be treated as other revenue or other income.
- 13Sales value at split-off allocationA method of assigning joint cost to joint products that uses the relative sales values of the products at the split-off point as the proration basis; use of this method requires that all joint products are salable at the split off point
- 14ScrapAn incidental output of a joint process; is salable but the sales value from scrap is not enough for management to justify undertaking the joint process; is viewed as having a lower sales value than a byproduct; has a minimal but distinguishable disposal value.
- 15Separate Costa cost that follows incurrence of joint cost and that is related to a specific product or group of products; is assigned only to that product or group of products.
- 16split off pointthe point at which the outputs of a joint process are first identifiable or can be separated as individual products
- 17Wastea residual output of a production process that has no sales value and that must be disposed.