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 total joint cost allocation among the three products?
I. Net realizable value
II. Sales value at split-off point
III. Physical output
IV. Constant gross margin NRV
A) I and II only
B) II and III only
C) I and IV only
D) All methods will result in the same total joint cost allocated

Question

Quizplus · Accepted Answer

All methods of allocating joint costs (Net Realizable Value, Sales Value at Split-off Point, Physical Output, and Constant Gross Margin NRV) will result in the same total joint cost allocation of $365, as the total joint costs are allocated in full regardless of the method used.

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