A Reason Why a Physical-Measure to Allocate Joint Costs Is

question 111

Multiple Choice

A reason why a physical-measure to allocate joint costs is less preferred than the sales value at splitoff is:

• A)a physical measure such as volume is difficult to estimate because of shrinkage
• B)physical volume usually has little relationship to the revenue producing power of products
• C)a physical measure usually results in the costs being allocated to the product that weighs the most
• D)All of these answers are correct.

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Definitions:

Curvilinear Relationship

A relationship between two variables where the change in one variable does not consistently result in a proportional change in the other, often depicted as a curved graph.

Residual Plot

A graph that shows the residuals (the differences between observed and predicted values) on the vertical axis against the predicted values on the horizontal axis, used to evaluate the fit of a model.

Curvilinear Regression

A form of regression analysis in which the relationship between the independent variable and the dependent variable is modeled as an nth degree polynomial.

Specific Risk

A type of risk that affects a very small number of assets, such as a single stock or sector, also known as unsystematic or idiosyncratic risk.