Consider the following statement: Each product is assigned a weighting factor that is multiplied by the number of units.Joint cost is prorated to the products on the basis of each product's share of total weighted units.Which joint cost allocation method does the statement describe?

Question

Quizplus · Accepted Answer

The statement describes the weighted average method, which assigns a weighting factor to each product based on the number of units produced and then allocates joint costs based on the product's share of the total weighted units. This is different from the physical units method, which allocates joint costs based solely on the number of physical units produced, and the sales-value-at-split-off and net realizable value methods, which allocate joint costs based on the relative sales values or net realizable values of the products.

Consider the Following Statement: Each Product Is Assigned a Weighting