For Each of the Following Methods of Allocating Joint Costs

question 91

Essay

For each of the following methods of allocating joint costs, give a positive or a negative aspect of selecting each one to allocate joint costs.
a.sales value at split-off
b.estimated net realizable value method
c.the constant gross margin method
d.a physical measure such as volume

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Definitions:

Investor

An individual or entity that allocates capital with the expectation of receiving financial returns, typically involving a level of risk.

Private Placement

The sale of securities directly to a small number of private investors rather than through a public offering, often used by smaller companies to raise capital.

Public

Refers to the general populace or to companies and organizations that are owned by government entities or whose shares are traded publicly.

Venture Capital Groups

Organizations that provide funding to startups or small businesses with high growth potential in exchange for equity.