Allocating Joint Costs to Products Using a Value Basis Method

question 141

Multiple Choice

Allocating joint costs to products using a value basis method is based on their relative:

• A)Sales values.
• B)Direct costs.
• C)Gross margins.
• D)Total costs.
• E)Variable costs.

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Definitions:

Labour and Overhead Costs

The combined costs of direct labour and all overhead expenses associated with the production of goods or services.

Materials Costs

The costs associated with the raw materials used in the manufacturing of products.

FIFO Method

A process costing method in which equivalent units and unit costs relate only to work done during the current period.

Process Costing System

A technique for evaluating the cost of production where costs are assigned to batches of products, typically applicable in manufacturing environments where products are identical.