Question

11. Joint costs are: a. Costs that are generated by more than one department. b. Costs...

11. Joint costs are:
a. Costs that are generated by more than one department.
b. Costs that have a fixed and a variable component.
c. Costs that are incurred to produce more than one product.
d. Costs that are impossible to allocated to production under GAAP.
Business   Accounting   
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Answer #1

Answer:

Joint products & Joint Cost: Two or more products of equal importance, produced, simultaneously from the same process, with each having a significant relative sale value are known as joint products & the cost incurred to produce such product is known as joint cost.

The joint cost incurred to produce the product can be allocated using various methods such as physical quantity method, Sale value at split-off method, Net realizable value method, etc., Joint cost is not the cost which is generated by more than one department.

Accordingly, Option (c) is the correct answer.

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