Cost distortions are likely when products have differential incremental contributions under which of the following methods?
A) Sales value at split-off point
B) Constant gross margin NRV
C) Physical output
D) Net realizable value

Question

Quizplus · Accepted Answer

The physical output method can lead to cost distortions when products have different incremental contributions because it allocates joint costs based on physical measures, which may not reflect the economic value or profitability of the products.

Cost Distortions Are Likely When Products Have Differential Incremental Contributions