A chocolate company uses the weight of joint products as the allocation basis. This type of cost allocation is the:

Question

Quizplus · Accepted Answer

The physical units method allocates joint costs based on the weight or volume of the joint products. This is the method being used by the chocolate company. The relative sales value method allocates joint costs based on the relative value of the products at the point of sale, while the net realisable value method allocates joint costs based on the expected selling price of the products minus the expected costs of completing and selling them. The joint cost allocation method is the overall approach to dividing joint costs among joint products.

A Chocolate Company Uses the Weight of Joint Products as the Allocation