The cause-and-effect criterion is not present when joint costing is used.

Question

Quizplus · Accepted Answer

Joint costing is used to allocate costs to multiple products or services that are produced together. The cause-and-effect criterion, which is used to allocate costs based on the specific cause of the cost, is not applicable in joint costing because the costs cannot be directly traced to a specific product or service. Instead, joint costs are allocated based on a predetermined method, such as the relative sales value or production volume of each product.

The Cause-And-Effect Criterion Is Not Present When Joint Costing Is