Which joint cost allocation methods are preferred because they are based on a product's ability to pay for its allocated cost?
I. Constant gross margin NRV
II. Physical output
III. Net realizable value
A) I and II only
B) I and III only
C) II and III only
D) III only

Question

Quizplus · Accepted Answer

Constant gross margin NRV and net realizable value are preferred joint cost allocation methods because they are based on a product's ability to pay for its allocated cost. Physical output method does not take into consideration the products' profitability or selling price.

Which Joint Cost Allocation Methods Are Preferred Because They Are