Which of the following is true of the physical-measure approach of allocating joint costs?
A) Costs cannot be allocated if the measurement basis for each product are different.
B) Physical measures usually result in less costs being allocated to the product that weighs the most.
C) The physical measure reflects a product's ability to generate revenues.
D) Obtaining comparable physical measures for all products is always straightforward.

Question

Quizplus · Accepted Answer

The physical-measure approach allocates joint costs based on a physical attribute, such as weight, volume, or units produced. However, it may not be possible to allocate costs if the measurement basis for each product is different. For example, if one product is measured in units produced while another product is measured in weight, it can be difficult to allocate costs fairly between the two products.

Which of the Following Is True of the Physical-Measure Approach