Which of the Following Is a DISADVANTAGE of the Physical-Measure

question 38

Multiple Choice

Which of the following is a DISADVANTAGE of the physical-measure method of allocating joint costs?

• A)The measurement basis for each product may be different.
• B)The need for a common denominator.
• C)The physical measure may not reflect the product's ability to generate revenues.
• D)All of these answers are correct.

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Definitions:

Monthly Basis

Refers to any activity or calculation done or occurring every month.

Set-Up Costs

Expenses incurred to prepare and configure equipment or processes for production.

Activity-Based Costing

An approach to costing that recognizes organizational activities and distributes each activity's costs to every product and service, reflecting their real consumption.

High-Low Method

A technique used in cost accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.