Answer (A) is correct . Joint costs are most often assigned on the basis of relative sales values or net realizable values. Basing allocations on physical quantities, such as pounds, gallons, etc., is usually not desirable because the costs assigned may have no relationship to value. When large items have low selling prices and small items have high selling prices, the large items might always sell at a loss when physical quantities are used to allocate joint costs.
Answer (B) is incorrect because Physical quantities are usually easy to measure.
Answer (C) is incorrect because Additional processing costs will have no more effect on the allocation of joint costs based on physical quantities than any other base.
Answer (D) is incorrect because The purpose of allocating joint costs, under any method, is to separate such costs on a unit basis.
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