Litigation may be a reason that joint costs are allocated to individual products.

Question

Quizplus · Accepted Answer

If a company is involved in litigation or faced with the possibility of litigation, it may be necessary to allocate joint costs to individual products in order to demonstrate the actual costs associated with each product and to comply with legal regulations. Failure to adequately allocate costs could result in legal penalties or financial consequences.

Litigation May Be a Reason That Joint Costs Are Allocated