Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 16 - Cost Allocation: Joint Products and Byproducts - Assignment Material - Questions - Page 652: 16-11

Answer

The constant gross-margin percentage NRV method is sometimes referred to as a "joint-cost-allocation and a profit-allocation" method because it considers not only joint costs but also the post-splitoff point profit contribution of individual products when assigning costs. In contrast, other methods like the sales value at splitoff and NRV methods allocate only the joint costs to individual products, ignoring the profit element.

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