Which Joint Cost Allocation Method Is Described by the Following

question 118

Multiple Choice

Which joint cost allocation method is described by the following statement? Overall sales revenue minus overall costs (joint plus further processing costs) is calculated to yield gross profit and the gross profit percentage. Each product is then assigned the same cost of goods sold percentage.

• A)constant gross margin method
• B)weighted average method
• C)sales-value-at-split-off method
• D)net realizable method

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Definitions:

Compounded Quarterly

A method where interest is calculated and added to the principal balance four times a year, affecting the total interest accrued over time.

Promissory Note

An economic tool comprising a formal pledge by one party to give a specific amount of money to another, redeemable upon request or at a predetermined time.

Discounted

Refers to the reduction of an item's price or the present value of future cash flows discounted back to the present value.

Proceeds

The amount of money brought in from a transaction or sale, before any expenses are deducted.