Question

Fortified Fiber Corporation (FFC) has a manufacturing process that produces three products that together incur joint costs. FFC's managerial accountants have determined the appropriate split-off point. Which of the following statements regarding the new costs incurred in the FFC production process after the split-off point is true?
a.All new costs after the split-off point will be related to the joint process.
b.All new costs after the split-off point will be considered period costs and expensed immediately.
c.Any new costs after the split-off point will have to be allocated as joint costs.
d.Any new costs incurred in FFC's production process after the split-off point can be traced to one of the three final products.

Answer 1

Answer:

d.Any new costs incurred in FFC's production process after the split-off point can be traced to one of the three final products.

Explanation:

the following statements regarding the new costs incurred in the FFC production process after the split-off point : any new costs incurred in FFC's production process after the split-off point can be traced to one of the three final products.

Costs before the split-off point will have to be allocated as joint costs but those costs incurred in the production process after the split-off point are directly traceable to the final products.

Answer 2

Answer:

D) Any new costs incurred in FFC's production process after the split-off point can be traced to one of the three final products.

Explanation:

Before the split-off point, the plant only produces one product or component.

                           ⇒product A1 ⇔ specific costs of A1

product A           ⇒product A2 ⇔ specific costs of A2

                           ⇒product A3 ⇔ specific costs of A3

After the split-off point, three separate products (all derived from the original) are manufactured. Before the split-off point, all the costs are assigned to the original or base product, and then after the split-off point every cost must be assigned to one of the products.