When Considering the Allocation of Joint Costs, Which of the Following

question 115

Multiple Choice

When considering the allocation of joint costs, which of the following statements (if any) is false?

• A) If there are no beginning inventories and all products are sold at the split-off point, the relative sales value method and the constant gross margin percentage methods yield the same results.
• B) In order to use the actual sales value at split-off method, management does not have to determine which products will be produced beyond the split-off point or what separable costs will be incurred.
• C) A problem with the physical measures method of allocation is that it may not be related to the product's ability to produce revenue.
• D) The cause-effect criterion is the key principle in allocating costs when joint costing is used.

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