Which method of allocating joint costs is most likely to develop a true cost per unit of product?
A) Physical output
B) Sales value at split-off point
C) Net realizable value
D) None of the above; all methods result in arbitrary allocations

Question

Quizplus · Accepted Answer

All methods of allocating joint costs (physical output, sales value at split-off point, and net realizable value) result in arbitrary allocations because they do not reflect the actual costs incurred for each specific product but rather distribute the total costs based on some arbitrary measure.

Which Method of Allocating Joint Costs Is Most Likely to Develop