Consider the following statements about joint product cost allocation:
I. Joint product cost is allocated because it is necessary for inventory valuation.
II. Joint product cost is allocated because it is necessary for making economic decisions about individual products (e.g., sell at split-off or process further).
III. Joint cost may be allocated to products by using several different methods.
Which of the above statements is (are) correct?
A) I only.
B) III only.
C) I and II.
D) I and III.
E) I, II, and III.

Question

Quizplus · Accepted Answer

Statement I is correct because joint product cost allocation is necessary for inventory valuation. Statement III is correct because joint costs can be allocated using various methods. Statement II is incorrect because joint product cost allocation is not necessary for making economic decisions about individual products.

Consider the Following Statements About Joint Product Cost Allocation