One of ABC Company\'s primary products can be sold either at the split-off point

ID: 2530678 • Letter: O

Question

One of ABC Company's primary products can be sold either at the split-off point or after additional processing.

Which of the following statements about the product is false?

The unit of measure for this product under the net realizable value method of allocating joint costs can be different that the unit of measure used in the physical unit method.

The amount of additional processing costs charged to the product would be the same under any of the three allocation methods covered.

As long as the product shows a gross profit, it should be sold after the additional processing is complete.

The gross profit would likely differ if the physical unit method of allocating joint costs was used instead of the sales value at split off method.

Explanation / Answer

Below statement is False: As long as the product shows a gross profit, it should be sold after the additional processing is complete. Explanation: Decision of selling the product on split-off point or after additional processing depends on which option have more gross profit and not upon that the product have gross profit after the additional processing.

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One of ABC Company\'s primary products can be sold either at the split-off point

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