constant gross margin percentage method the net realizable value method is easy to apply. however, it assigns all profit to the hypothetical market value. in other words, the further processing cost are assumed to have no profit value even though they are critical to selling the products. the constant gross margin percentage method corrects for this by recognizing that costs incurred after the split-off point are past of the cost total on which profit is expected to be earned,and it allocates joint ost such that the gross margin percentage is the same for each product, cornerstone7.11 shows how and why to apply the constant gross margin percentage method in joint cost allocations