When the selling prices of all products at the split-off point are unavailable, the ________ is the best alternative for allocating joint costs.
A) sales value at split-off method
B) NRV method
C) physical measures method
D) constant gross-margin percentage method

Question

Quizplus · Accepted Answer

When selling prices at the split-off point are unavailable, the Net Realizable Value (NRV) method is typically the best choice for allocating joint costs. It takes into account the estimated revenue that will be generated from each product after further processing beyond the split-off point, minus any additional costs that will be incurred to get the products ready for sale. This method typically provides a more accurate representation of the relative value of each product, compared to other allocation methods that rely on less direct or less specific measures of value.

When the Selling Prices of All Products at the Split-Off