Managers should choose a joint cost allocation method to avoid giving the impression that one or more products are sold at a loss when they actually contribute to profitability.

Question

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By choosing a joint cost allocation method, managers can avoid allocating all joint costs to a single product or group of products, which could give the false impression that those products are being sold at a loss. Instead, the joint cost allocation method can accurately reflect the contribution of each product to overall profitability.

Managers Should Choose a Joint Cost Allocation Method to Avoid