RKH Corporation produces three joint products. During a recent accounting period, joint costs totalled $365 and RKH had no beginning inventories. Additional data appear below: M1 M2 M3
Volume (kilograms)150 50 300
Sales value at the split-off point $375 $155 $600
Sales value after further processing $450 $200 $900
Separable costs $50 $35 $100
Which of the following methods will result in the smallest joint cost allocation to M3?
A)Net realizable value
B)Sales value at split-off point
C)Physical output
D)Constant gross margin NRV

Question

Quizplus · Accepted Answer

The sales value at the split-off point method allocates joint costs based on the proportion of sales value at the split-off point, which is lowest for M3 compared to its sales value after further processing.

RKH Corporation Produces Three Joint Products