The Drawback of the Constant Gross-Margin Percentage NRV Method in Joint

question 20

Multiple Choice

The drawback of the constant gross-margin percentage NRV method in joint costing is that ________.

• A) it recognizes that profits are derived from the costs incurred after splitoff
• B) it assumes the profit margin to be identical across all products
• C) it attempts to approximate the sales values at splitoff by subtracting from final selling prices the separable costs incurred after the splitoff point
• D) it ignores the separable costs of further processing

---

Definitions:

Tropical Climate

A non-arid climate characterized by consistent high temperatures throughout the year, usually found within 23.5 degrees north or south of the equator.

Organic Debris

Organic matter, such as leaves, twigs, and other plant or animal material, that has accumulated in a natural environment.

Calcium Carbonate

A chemical compound with the formula CaCO3, commonly found in rocks as the minerals calcite and aragonite and is the main component of pearls and the shells of marine organisms.

Clay

1. Any fine-grained sedimentary particle that is finer than 1/256 mm. 2. A family of finely crystalline, hydrous-silicate minerals with a two- or three-layered crystal structure.