Asked by Jackie Ramirez on Jul 13, 2024
Verified
Falco Industries may want to use the net realizable value method of allocating joint costs because it manufactures many products that are processed further after the split-off point and will be sold for a much higher price after the additional processing.
Net Realizable Value
The estimated selling price of an item of inventory less any direct costs of disposal, such as sales commissions; the value of the receivables reduced to the amount that is expected to be collected or realized, computed as accounts receivable less allowance for doubtful accounts.
- Gain an understanding of the basic principles for apportioning joint costs and the obstacles encountered.
- Understand the different strategies for overseeing and examining product expenses, encompassing joint costs.
Verified Answer
JM
Jeremy McClellandJul 17, 2024
Final Answer :
True
Explanation :
The net realizable value method allocates joint costs based on the final sales value minus any additional processing costs after the split-off point, making it suitable for situations where products undergo further processing and are sold at significantly higher prices.
Learning Objectives
- Gain an understanding of the basic principles for apportioning joint costs and the obstacles encountered.
- Understand the different strategies for overseeing and examining product expenses, encompassing joint costs.
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