Which of the Following Statements Is True of the Methods

question 109

Multiple Choice

Which of the following statements is true of the methods for allocating joint costs?

• A) Under the cause-and-effect criterion, the physical-measure method is highly desirable.
• B) Byproducts are never excluded from the denominator used in the physical-measure method.
• C) The NRV method is never used when the selling prices of joint products vary frequently.
• D) The sales value at split-off method follows the benefits-received criterion of cost allocation.

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Definitions:

Marginal Cost

Marginal Cost is the cost incurred by producing one additional unit of a product.

Cartel

An association of independent businesses or countries that collaborate to control prices and limit competition within a particular market or industry.

Market Price

The prevailing cost at which one can buy or sell an asset or service.

Marginal Cost

The augmentation in total costs associated with the production of an additional unit of a product or service.