Week#3 Lecture Notes Chp 16.ppt - ACCT3203 Contemporary Managerial Accounting Cost Allocation(II Second Semester 2016 Prepared By Professor Vincent

Week#3 Lecture Notes Chp 16.ppt - ACCT3203 Contemporary...

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ACCT3203 Contemporary Managerial Accounting Cost Allocation (II) Second Semester 2016 Prepared By: Professor Vincent Chong UWA Business School The University of Western Australia Week#3: Week commencing 15 August 2016
Cost Allocation (II): Joint Products and Byproducts Learning Objectives: Identify the split-off point(s) in a joint cost situation Distinguish joint products from byproducts Explain why joint costs are allocated to individual products Allocate joint costs using four methods Explain why joint costs are irrelevant in a sell-or-process further decisions Account for byproducts using two different methods
Allocation of Joint Costs Manufacturing firms produce several end-products (saleable products) from a single raw material input Example: A Meat-Packing company produces several end products (e.g., bacon, ham, pork chops, etc.) from a common input (e.g., pig) [ see graphical presentation ] To decide how the cost of that input is going to be divided among the end products – Allocation of joint costs
Allocation of Joint Costs-[ Cont. ]

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