The joint-cost allocation method that recognizes the revenues at split-off but does not consider any further processing costs is the:
A)relative-sales-value method.
B)net-realizable-value method.
C)physical-units method.
D)reciprocal-services method.
E)gross margin at split-off method.

Question

Quizplus · Accepted Answer

The relative-sales-value method recognizes the revenues at split-off, but does not consider any further processing costs. It allocates joint costs to each product based on the relative proportion of total sales value that each product represents. Therefore, it is the appropriate choice for this scenario. The net-realizable-value method and the gross margin at split-off method both consider further processing costs, so they are not suitable in this case. The physical-units method allocates joint costs based on the number of physical units produced and does not account for the differences in the sales value of various products. The reciprocal-services method is used in situations where services are exchanged among departments, so it is not relevant in this situation.

The Joint-Cost Allocation Method That Recognizes the Revenues at Split-Off