Asked by Hanna Ready on Jun 01, 2024
Verified
The joint cost allocation method that ensures that the gross margin for each product is identical is the:
A) relative sales value method.
B) net realisable value method.
C) joint cost allocation method.
D) constant gross margin method.
Constant Gross Margin Method
A pricing strategy where the gross margin percentage is kept constant despite variations in product costs.
Joint Cost Allocation
The process of assigning the cost of a production process that yields multiple products proportionally to those products.
- Examine the workflow of combined production efforts, the apportionment of costs borne together, and the fiscal strategy concerning augmenting processing or opting for sale at the juncture of split-off.
Verified Answer
AZ
Anastasiia ZotovaJun 03, 2024
Final Answer :
D
Explanation :
The constant gross margin method allocates joint costs based on the gross margin percentage of each product. This ensures that the gross margin for each product is identical, making it a fair method of allocation. The other methods may not necessarily result in the same gross margin for each product.
Learning Objectives
- Examine the workflow of combined production efforts, the apportionment of costs borne together, and the fiscal strategy concerning augmenting processing or opting for sale at the juncture of split-off.
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