The physical output method of joint product cost allocation
A) is useful for all product costing
B) is rarely used
C) is useful only when the output for all main products can be expressed in the same physical measure
D) is useful when products have similar net realisable values

Question

Quizplus · Accepted Answer

The physical output method of joint product cost allocation is suitable only when the main products' output can be expressed in the same physical measure. This method allocates costs on the basis of the relative proportion of each product's physical output quantity to the total physical output quantity. It is commonly used in industries such as oil and gas, livestock farming, and lumber, where different products are produced from the same raw materials through common processing.

The Physical Output Method of Joint Product Cost Allocation