To avoid the appearance that a joint product is incurring losses,a company might allocate joint costs based on relative sales value of each product at the split-off point.

Question

Quizplus · Accepted Answer

When allocating joint costs based on relative sales value of each product at split-off point, it reduces the possibility of one product appearing to incur losses while the other product is profitable. This method of allocation is known as the sales value method.

To Avoid the Appearance That a Joint Product Is Incurring