Which of the Following Best Describes How the Constant Gross-Margin

question 95

Multiple Choice

Which of the following best describes how the constant gross-margin percentage NRV method allocates joint costs?

• A) a gross margin is calculated and for each product and then the gross margin is deducted along with separable costs from the final sales value of a product to derive the joint cost allocation for a product
• B) an overall gross margin is calculated and for each product and then the gross margin is deducted along with separable costs from the final sales value of a all the products produced in the joint processing and the allocations are then made based on physical volume measures
• C) an overall gross margin is calculated and for each product the gross margin is deducted along with separable costs from the final sales value of a product to derive the joint cost allocation for the product
• D) a gross margin is calculated and for each product and then gross margin is deducted along from the final sales value of a product to derive the joint cost allocation for a product.

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Definitions:

Sales

Transactions between a seller and a buyer where the seller provides goods, services, or assets in exchange for money or other compensation.

Break-even Point

The point at which total cost and total revenue are equal, meaning no net loss or gain, and one has "broken even".

Mixed Cost

A type of cost that contains both fixed and variable components and changes in total with the level of activity.

Rental Cost

The expense incurred for using a property, equipment, or other asset under a lease agreement for a specified period.