Main Product

### What defines a main product in a production process? - [ ] It has the least economic value. - [x] It has the greatest economic significance. - [ ] It is produced in the largest quantity. - [ ] It is hard to differentiate from by-products. > **Explanation:** The main product is defined by its greatest economic significance compared to other outputs in the production process. ### What are by-products in a production process? - [x] Secondary products of minimal economic importance - [ ] Primary products with the highest market value - [ ] Joint products with equal significance - [ ] Products without any economic value > **Explanation:** By-products are secondary products often considered waste or residual because of their minimal economic importance. ### How are joint products different from the main product? - [ ] They are produced later in the process. - [ ] They have no market value. - [x] They have approximately equal economic significance. - [ ] They are considered waste. > **Explanation:** Joint products are distinguished from the main product by having approximately equal economic significance, making it hard to identify one as the main product. ### Which industry typically uses process costing to allocate costs? - [ ] Retail - [x] Manufacturing with continuous production - [ ] Construction - [ ] Service > **Explanation:** Process costing is used in industries with continuous production, such as manufacturing, to allocate costs effectively among processes and products. ### Can the cost allocation to by-products be based on their selling price? - [x] Yes, based on their net realizable value. - [ ] No, always equal distribution. - [ ] Only if they are of greater economic importance than the main product. - [ ] Never, costs are always allocated to the main product. > **Explanation:** By-products can absorb minimal costs related to their net realizable value or selling price. ### What is the significance of distinguishing between main and joint products? - [ ] Ensures proper allocation of costs. - [ ] Affects financial reporting and profit calculation. - [ ] Helps in pricing decision and inventory management. - [x] All of the above. > **Explanation:** Distinguishing between main and joint products ensures proper cost allocation, affects financial reporting, and aids in pricing and inventory management. ### When can a by-product have economic importance? - [ ] When it surpasses the main product in value. - [ ] Only when there is no main product. - [x] When it has a market value that can be realized. - [ ] Always, by-products are equally important as the main product. > **Explanation:** By-products have economic importance when they have a market value that can be realized upon sale. ### What accounting method is used for assigning costs to different stages in a continuous production process? - [x] Process costing - [ ] Job order costing - [ ] Activity-based costing - [ ] Standard costing > **Explanation:** Process costing is the method used for allocating costs to various stages in a continuous production process, typically in manufacturing. ### Why might a by-product be important to monitor in production? - [ ] It often becomes the main product. - [x] If sold, it can contribute additional revenue. - [ ] It can significantly reduce the manufacturing workload. - [ ] It is often ignored in cost analysis. > **Explanation:** By-products, if sold, can contribute additional revenue and impact overall profitability, making them important to monitor. ### Which of the following is a characteristic of joint products? - [x] Have equal economic significance - [ ] Derived from different production processes - [ ] Have minimal market value - [ ] Are always produced in one stage > **Explanation:** Joint products are characterized by having approximately equal economic significance and come from the same production process.