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Financial reporting, NRV or physical-measures method.

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Assume that your company operates a joint-production process that generates three main products and one by-product. If you allocate joint costs only for financial reporting, would you ever care whether you use the NRV or the physical-measures method? Explain.

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Solution Summary

Allocating costs is more than a financial reporting exercise. Posting explains why.

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Well, you would only care if you didn't sell everything you made and you didn't use product cost for other purposes. These two methods will assign costs ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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