RKH Corporation Produces Three Joint Products Which of the Following Methods Will Result in the Greatest

question 74

Multiple Choice

RKH Corporation produces three joint products. During a recent accounting period, joint costs totalled $365 and RKH had no beginning inventories. Additional data appear below: $\begin{array}{lrrr}& \underline{\text { M1 }}& \underline{ \text { M2 } }& \underline{\text { M 3}}\\\text { Volume (kilograms) } & 150 & 50 & 300\\\text { Sales value at the split-off point } & \$ 375 & \$ 155 & \$ 600 \\\text { Sales value after further processing } & \$ 450 & \$ 200 & \$ 900 \\\text { Separable costs } & \$ 50 & \$ 35 & \$ 100\end{array}$ Which of the following methods will result in the greatest total joint cost allocation among the three products?
I. Net realizable value
II. Sales value at split-off point
III. Physical output
IV. Constant gross margin NRV

• A) I and II only
• B) II and III only
• C) I and IV only
• D) All methods will result in the same total joint cost allocated

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Definitions:

Mortgage

A contractual arrangement where a bank or lender provides funds at an interest rate, securing the loan by assuming ownership of the borrower's property, which reverts back to the borrower once the loan is fully repaid.

Restrictive Covenant

A clause in a contract that limits certain actions of the parties involved, often to protect business interests.

Invalid

Describes an action, document, or agreement that lacks legal force or effect, rendering it void or not legally binding.

Right of Redemption

The legal right that allows a debtor to reclaim property or goods that were previously sold or foreclosed upon, typically by paying off a debt within a specific time frame.