The estimated net realizable method allocates joint costs on the basis of
A)expected final sales value less separable costs of production and marketing.
B)value added after the splitoff point.
C)sales value less value added after the splitoff point.
D)revenue less all direct manufacturing costs after splitoff point.
E)relative numbers of physical units of each product.

Question

Quizplus · Accepted Answer

The estimated net realizable method allocates joint costs based on the expected final sales value less separable costs of production and marketing. This method takes into consideration the revenue that each product will generate after it has been processed and sold, as well as the direct costs that are associated with producing and marketing each product separately. This approach is particularly useful when products have different sales values and production costs, as it allows joint costs to be allocated in a way that reflects the relative contribution of each product to overall revenue.

The Estimated Net Realizable Method Allocates Joint Costs on the Basis