Allocating Joint Costs to Products Using a Value Basis Method

question 141

Multiple Choice

Allocating joint costs to products using a value basis method is based on their relative:

• A)Sales values.
• B)Direct costs.
• C)Gross margins.
• D)Total costs.
• E)Variable costs.

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Definitions:

Direct Labor Costs

Expenses associated with employees who are directly involved in the production of goods or services.

Work in Process

Inventory that includes partially completed goods that are still in the production process.

Wages Payable

An account that records the amounts owed to employees for work performed that has not yet been paid.

Factory Overhead

All indirect costs associated with the production process, such as maintenance, utilities, and management salaries, not directly tied to specific units of product.