Which of the following reasons explain why a physical-measure to allocate joint costs is less preferred than the sales value at split-off point?
A) a physical measure such as volume is difficult to estimate than sales value
B) physical volume usually has little relationship to the revenue producing power of products
C) a physical measure usually results in less costs being allocated to the product that weighs the most
D) customers will easily understand that the products are overpriced

Question

Quizplus · Accepted Answer

A physical measure such as volume may not accurately reflect the revenue producing power of products, which can lead to inaccurate allocation of joint costs.

Which of the Following Reasons Explain Why a Physical-Measure to Allocate