The most common method to allocate joint costs is in proportion to the relative sales value of the products.

Question

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The most common method to allocate joint costs is in proportion to the relative sales value of the products. This is because sales value is usually a good indicator of the relative benefits the products provide to customers, which in turn justifies the allocation of joint costs based on this factor. Other methods, such as physical quantities or labor costs, may not adequately reflect the value of the products and may result in unfair or inaccurate cost allocations.

The Most Common Method to Allocate Joint Costs Is in Proportion