If two or more products share a common process before they are separated, the joint costs should be allocated in a manner that:
A)Assigns a proportionate amount of the total cost to each product by means of a quantitative basis.
B)Maximizes total earnings.
C)Minimizes variations in a unit of production cost.
D)Does not introduce an element of estimation into the process of accumulating costs for each product.

Question

Quizplus · Accepted Answer

An allocation method is usually selected that will assign a portion of a given total cost to each of the products that are sharing a physical part of the total item. A quantitative method is chosen that will least affect the gross profit percentage differences among these products.

If Two or More Products Share a Common Process Before