An example of allocating joint costs using physical measures is allocating joint costs based on the ________.
A) sales value at split-off point
B) volume of the products produced
C) constant gross-margin percentage
D) net realizable value

Question

Quizplus · Accepted Answer

Allocating joint costs based on the volume of the products produced is a common method of allocation using physical measures. This is because the costs of producing joint products are usually related to the amount of material processed, time spent, or other physical measures. Therefore, allocating costs based on the production volume can provide a relatively fair and objective allocation of joint costs among different products. Other options listed such as sales value at split-off point, constant gross-margin percentage, and net realizable value may be used as well, but these are not physical measures.

An Example of Allocating Joint Costs Using Physical Measures Is