The best method to determining weights for the stand-alone revenue-allocation method is ________.
A) selling prices revenue-allocation method because the weights explicitly consider the prices customers are willing to pay for the individual products
B) unit cost revenue-allocation method because it can be used on all occasions
C) the direct revenue-allocation method since selling prices or unit costs are difficult to calculate for individual products
D) physical-units revenue-allocation method because the physical units explicitly value the prices customers are willing to pay for the individual products

Question

Quizplus · Accepted Answer

The selling prices revenue-allocation method is the best method to determine weights because it explicitly considers the prices customers are willing to pay for individual products. It is considered more accurate than the unit cost method because it reflects the value customers place on each product. The direct revenue-allocation method may not be as accurate since it does not consider the individual prices or costs of specific products. The physical-units revenue-allocation method also does not account for the differences in value between individual products.

The Best Method to Determining Weights for the Stand-Alone Revenue-Allocation