When a company allocates joint costs using the relative net realizable values method, it will usually compute equal gross margin percentages for each of the joint products.

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This is because the relative net realizable value method allocates joint costs based on the expected selling prices of each product, taking into account any additional processing or marketing costs necessary to make the product ready for sale. As a result, each product will have a similar margin percentage since their costs are being allocated based on their expected profitability.

When a Company Allocates Joint Costs Using the Relative Net