The method of allocating joint costs used when output product prices are highly volatile or when significant processing occurs between the splitoff point and the first point of marketability is called the
A)absolute quantities method.
B)physical qualities method.
C)physical quantities method.
D)absolute qualities method.

Question

Quizplus · Accepted Answer

The physical quantities method is appropriate when output prices are highly volatile because it allocates joint costs according to the physical quantities produced, rather than assigning values based on uncertain prices. This method is also suitable when significant processing occurs between the splitoff point and the first point of marketability, as it is based on measurable physical quantities rather than subjective quality assessments.

The Method of Allocating Joint Costs Used When Output Product