Answer
The NRV (Net Realizable Value) method is employed for joint-cost allocation when outputs from a production process are separable at the splitoff point, but their selling prices become known only after further processing. Industries like integrated pulp and paper companies and petrochemical operations often encounter this scenario. In such cases, the NRV method is used because the initial selling prices necessary for the sales value at splitoff method are unavailable until additional processing is completed.
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