How Does the Physical-Measure Method Allocate Joint Costs

question 11

Multiple Choice

How does the physical-measure method allocate joint costs?

• A) allocates joint costs to joint products in a way that each product has an identical gross-margin percentage
• B) allocates joint costs to joint products on the basis of a comparable physical measure at the split-off point
• C) allocates joint costs to joint products on the basis of the relative sales value at the split-off point
• D) allocates joint costs to joint products on the basis of relative NRV

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Definitions:

Supply Curves

A graphical representation showing the relationship between the price of a good or service and the quantity of it that suppliers are willing to offer at that price.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the true value of goods and services produced.

Supply Curves

A graphical representation that shows the relationship between the price of a good or service and the quantity that suppliers are willing to offer for sale at that price, over a given period.

Invisible Hand

A term coined by Adam Smith to describe the self-regulating nature of the marketplace where individuals pursuing their own self-interest lead to the benefit of society at large.