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 greatest total joint cost allocation among the three products?
I. Net realizable value
II. Sales value at split-off point
III. Physical output
IV. Constant gross margin NRV
A)I and II only
B)II and III only
C)I and IV only
D)All methods will result in the same total joint cost allocated

Question

Quizplus · Accepted Answer

All methods will result in the same total joint cost allocated because the total joint cost is fixed at $365 and must be allocated among the products. The method chosen only affects how the cost is distributed among the products, not the total amount allocated.

RKH Corporation Produces Three Joint Products