RKH Corporation produces three joint products. During a recent accounting period, joint costs totalled $365 and RKH had no beginning inventories. Additional data appear below: $\begin{array}{lrrr}
& \underline{\text { M1 }}& \underline{ \text { M2 } }& \underline{\text { M 3}}\
\text { Volume (kilograms) } & 150 & 50 & 300\
\text { Sales value at the split-off point } & \$ 375 & \$ 155 & \$ 600 \
\text { Sales value after further processing } & \$ 450 & \$ 200 & \$ 900 \
\text { Separable costs } & \$ 50 & \$ 35 & \$ 100
\end{array}$ Which of the following methods will result in the greatest joint cost allocation to M2?
A) Constant gross margin NRV
B) Net realizable value
C) Physical output
D) Sales value at split-off point

Question

Quizplus · Accepted Answer

Using the Sales value at split-off point method will result in the greatest joint cost allocation to M2 because it takes into account the relative sales values of the joint products at the split-off point. This method allocates joint costs based on the sales value of each product, which is determined at the time the products are split off from the joint process. Therefore, if M2 has a higher sales value than M1 and M3, it will receive a larger allocation of joint costs.

RKH Corporation Produces Three Joint Products Which of the Following Methods Will Result in the Greatest