With Regard to Joint Costs, Economists Generally Believe That

question 44

Multiple Choice

With regard to joint costs, economists generally believe that:

• A) For product pricing decisions, joint costs should be allocated based on relative sales value.
• B) For product pricing decisions, joint costs should be allocated based on relative physical quantities produced.
• C) For product pricing decisions, joint costs should be allocated based on relative net realizable value.
• D) For product pricing decisions, the allocation of joint costs is not relevant.

---

Definitions:

Opportunity Costs

The benefits a person or business foregoes by choosing one alternative over another.

Idle Capacity

Unused production capability within a manufacturing plant or business operation, often due to lack of demand or inefficiency.

Drop a Product

The decision by a company to cease the production and sale of a particular product.

Rent

A periodic payment made to use a property or piece of equipment owned by another party.