Allocating joint costs to products can be based on their relative:
A) Sales values.
B) Direct costs.
C) Gross margins.
D) Total costs.
E) Variable costs.

Question

Quizplus · Accepted Answer

Allocating joint costs based on sales values is the most common method used in practice because it reflects the relative value that each product contributes toward the joint costs. This method recognizes that products that generate higher sales values should absorb a larger portion of the joint costs than products that generate lower sales values.

Allocating Joint Costs to Products Can Be Based on Their