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Question 1:
The value of cost and profit data using joint product costing is often questioned when pre separation costs make up a very high proportion of the total production cost of a joint product.
In which of the following circumstances would this problem be overcome?
(a) The use of arbitrary allocation in the apportionment of joint costs
(b) Identifying and removing loss making joint products
(c) Monitoring total profits for all of the joint products together rather than individually
(d) Using the net realisable value method of joint product cost apportionment
Answer is C.Question 2:
Which of the following is/are not typically a feature of service costing?
(1) Allocating costs between fixed and variable elements
(2) Unique nature of the work
(3) Accurate time recording
(4) Work that extends beyond one accounting period
(5) Accuracy in valuing work in progress
Answers are 2 and 4.Please explain these two questions.
Q1. Joint costs are needed/shared for all eventual products and their split between products is ALWAYS arbitrary though should be consistently applied.
A, b and d all make use of an arbitrary split.
C does not attempt to apply an arbitrary split.
Q2 I have no explanation for this question. Service costing (eg an audit) is often unique.
There is no reason why a large project eg managing the construction of a bridge might not last several periods.
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