Question: I have difficulty in understanding drawbacks of using Net realizable value method for joint costs. Here are the drawbacks: - Joint costs only rerate to

  • I have difficulty in understanding drawbacks of using Net realizable value method for joint costs. Here are the drawbacks: - Joint costs only rerate to the joint process, not to the further production cost after the split off point, but the NRV could be high because of low additional costs after the split-off point. - reduce incentives for the line manager’s to reduce processing costs after the split-off point What do those two points mean?

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