The net realizable value method results in gross margin percentages that are equal as a percent of the net realizable value of each product, while the constant gross margin percentage requires that gross margin percentages be equal as a percent of the revenues of the joint products.

Question

Quizplus · Accepted Answer

The net realizable value method allocates joint costs based on the net realizable value of each product, resulting in gross margin percentages that are equal as a percentage of the net realizable value of each product.

The Net Realizable Value Method Results in Gross Margin Percentages