The benefits-received criteria for allocating joint costs indicate market-based measures are preferred because ________.
A) physical measures such as quantity are clear bases for allocating cost than other measures
B) physical measures are more difficult to calculate
C) revenues are usually the best indicators of the benefits received
D) revenues always remain consistent over short-run

Question

Quizplus · Accepted Answer

The benefits-received criteria seeks to allocate joint costs based on the level of benefit received by each product or service. Revenues are usually considered the best measure of benefits received because they reflect the ability of the product or service to generate income. Physical measures may not always reflect the true level of benefits received by each product or service, and revenues are more consistent over the short-run compared to other measures.

The Benefits-Received Criteria for Allocating Joint Costs Indicate Market-Based Measures