One problem with the physical measure method of allocation is that the physical weights used for allocating joint costs may have no relation to the product's ability to produce revenue.

Question

Quizplus · Accepted Answer

The physical measure method only considers the physical weights of joint products for allocating joint costs, which may ignore their relative market demand or pricing potential, leading to an unfair allocation of costs and wrong product pricing decisions.

One Problem with the Physical Measure Method of Allocation Is