Question

Which of the following would not be a GAAP or managerial accounting reason for allocating joint costs?

O A. to analyze the profitability of various divisions
O B. for reimbursement of costs under a federal contract
O C. to avoid generating "negative" revenue when disposal costs are considered
O D. to calculate cost of goods sold

Answer 1

Option C, to avoid generating 'negative' revenue when disposal costs are considered, is not a GAAP or managerial accounting reason for allocating joint costs. Joint costs allocation is mainly used for accurately evaluating profitability, federal contract reimbursements, and calculating cost of goods sold.

Step-by-step explanation:

The question asks which of the following would not be a Generally Accepted Accounting Principles (GAAP) or managerial accounting reason for allocating joint costs. The options are A) to analyze the profitability of various divisions, B) for reimbursement of costs under a federal contract, C) to avoid generating "negative" revenue when disposal costs are considered, or D) to calculate cost of goods sold. The correct answer is C) to avoid generating "negative" revenue when disposal costs are considered. This is not a typical reason for allocating joint costs under either GAAP or managerial accounting practices. The main purposes of allocating joint costs include accurately assessing the profitability of different divisions, ensuring costs can be reimbursed under contract terms, and correctly calculating the cost of goods sold in the financial statements.