b. Allocate the joint costs using the physical-measure method. Enter the amounts in the table and allocate the joint costs. (Enter the weighting to two decimal places.) Compute the gross margin percentages using the physical-measures method to allocate the joint costs. (Round the percentages to the nearest whole percent. Use parentheses or a minus sign when entering applicable negative gross margin amounts and percentages.) c. Allocate the joint costs using the net realizable value method. Enter the amounts in the table and allocate the joint costs. (Enter the weighting to two decimal places.) Net realizable value (NRV) method: Compute the gross margin percentages using the NRV method to allocate the joint costs. (Round the percentages to the nearest whole percent. Use parentheses or a minus sign when entering applicable negative gross margin amounts and percentages.) Requirement 2. Recently, Fancy discovered that the stock it is dumping can be sold to cattle ranchers at $4 per ton. In a typical month with the production levels shown above, 4,000 tons of stock are produced and can be sold by incurring marketing costs of $10,800. Sara Darbox, a management accountant, points out that treating the stock as a joint product and using the sales value at splitoff method, the stock product would lose about $5,292 each month, so it should not be sold. How did Darbox arrive at that final number? A. B. C. D. What do you think of her analysis? Should Fancy sell the stock? A. The analysis is flawed. Marketing costs are irrelevant to the decision. Only incremental costs and revenues prior to the splitoff point are relevant. In this case, then, the revenues, $16,000, and the joint costs, $10,492, from selling the stock result in an increase in Fancy's operating income of $5,508. Therefore, Fancy should sell the stock. B. Allocating joint costs to products according to the sales value at splitoff is a valid method of cost allocation. Based on Darbox's analysis using the sales value at splitoff method, selling the stock would result in a reduction of Fancy's operating income by $5,292; therefore, Fancy should not sell the stock. C. The analysis is flawed. Joint costs are always irrelevant in a process-further decision. Only incremental costs and revenues past the splitoff point are relevant. In this case, then, the revenues, $16,000, and the incremental costs, $10,800, from selling the stock result in an increase in Fancy's operating income of $5,200. Therefore, Fancy should sell the stock. D. As exemplified in requirement 1 , the different cost allocation methods results in different margins reported by Data table ata table