Two conventional ways of allocating joint costs to products are ________.
A) physical units and incremental revenues
B) physical units and incremental expenses
C) separable costs and relative sales values
D) physical units and relative sales values

Question

Quizplus · Accepted Answer

Allocating joint costs based on physical units alone can lead to incorrect allocation if the products have different market values, while using incremental revenues or expenses may not capture the true cost of producing the products. Instead, allocating joint costs based on both physical units and relative sales values provides a more accurate reflection of the cost incurred for each product. Separable costs, which are costs that can be directly traced to a specific product, can also be used in conjunction with relative sales values to allocate joint costs.

Two Conventional Ways of Allocating Joint Costs to Products Are