Chapter 11 PPT

# Chapter 11 PPT - Cost Accounting Foundations and Evolutions...

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Chapter 11 Allocation of Joint Costs and Accounting for By-Products Cost Accounting Foundations and Evolutions Kinney, Prather, Raiborn

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Learning Objectives (1of 1) Classify joint process outputs Identify when output becomes a joint product Allocate joint costs to products Describe how to handle by-products and scrap
Terms Joint process - single process in which one product cannot be manufactured without producing others Extractive industries Agriculture industries Food industries Chemical industries

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Terms A joint process produces (1) Joint products - primary outputs of a joint process; substantial revenue-generating ability (2) By-products – incidental output of a joint process with a higher sales value than scrap but less than joint products (3) Scrap –incidental output of a joint process with a low sales value (4) Waste - residual output with no sales value

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Terms Joint costs material, labor, and overhead incurred during a joint process Allocate to primary products of a joint process using Physical measures Monetary measures Interpret costs allocated to joint products carefully; product profitability is determined largely by the allocation method
Problem Caster Company uses a joint process to produce two products-widgets and wonders. The joint cost was \$400,000. The company produced 3,000 widgets and 5,000 wonders. Widgets sell for \$50 per unit and wonders sell for \$90 per unit. The cost to dispose of the widgets is \$10 per unit and the cost to dispose of the wonders is \$14 per unit.

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1. What is the joint cost allocated to widgets and wonders using the sales value at split-off method? 2.
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## This note was uploaded on 03/23/2010 for the course ACC_ 03 taught by Professor Zeegal during the Fall '10 term at Missouri State University-Springfield.

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Chapter 11 PPT - Cost Accounting Foundations and Evolutions...

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