The Constant Gross-Margin Percentage NRV Method of Joint Cost Allocation

question 45

Multiple Choice

The constant gross-margin percentage NRV method of joint cost allocation ________.

• A) involves allocating costs in such a way that maintaining the same gross margin percentage for each product that was obtained in prior years
• B) computes gross margin before allocating the costs to the products
• C) is the same as the estimated NRV method
• D) is the same as the sales-value at split-off method

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Definitions:

Equilibrium Price

The price that balances quantity supplied and quantity demanded.

Demand Schedule

A table that shows the quantity of goods or services that consumers are willing and able to purchase at various price levels.

Perfectly Competitive

A market structure characterized by a large number of buyers and sellers, homogenous products, and no barriers to entry or exit.

Duopoly Market

A market structure dominated by only two producers or sellers, leading to a form of competition that significantly impacts pricing and output decisions.