When the products emerging from a joint process are similar in size and in relative value per unit, the most appealing joint cost allocation method is:
A) Relative sales value
B) Net realizable value
C) Physical output method
D) Reciprocal method

Question

Quizplus · Accepted Answer

When the joint products have similar physical characteristics and value per unit, the physical output method is the most appropriate method for cost allocation. This method allocates joint costs based on the proportion of the total output that each product accounts for. For example, if two products emerge from a joint process in equal quantities, each product would be assigned 50% of the joint costs. This method is simple, straightforward, and easy to apply.

When the Products Emerging from a Joint Process Are Similar