Sell-or-process-further decisions based on gross margin per unit:
A) Provide the same contribution to profit as using the net-realizable-value method
B) May resemble the net-realizable-value per unit if physical quantities are positively related to the net-. realizable- value and further processing costs are similar across joint product alternatives
C) Provide the same contribution to profit as using the physical quantities method
D) Should never be used

Question

Quizplus · Accepted Answer

The gross margin per unit method for sell-or-process-further decisions can resemble the net-realizable-value per unit method when physical quantities are positively related to the net realizable value and further processing costs are similar across joint product alternatives. This is because both methods would then allocate costs in a similar manner, leading to comparable decisions regarding whether to sell a product as is or process it further.

Sell-Or-Process-Further Decisions Based on Gross Margin Per Unit