SOLUTION- JOINT AND BY-PRODUCT COSTING.pdf - JOINT PRODUCTS...

JOINT PRODUCTS AND
BY-PRODUCTS
DE LEON/ DE LEON/ DE LEON

JOINT PRODUCTION
• IS A PRODUCTION PROCESS THAT YIELDS TWO OR MORE PRODUCTS
SIMULTANEOUSLY FROM THE SAME RAW MATERIALS.
• CAN YIELD JOINT PRODUCTS AND BY-PRODUCTS.
• INCURS JOINT COST; CONSISTING OF DIRECT MATERIALS, DIRECT
LABOR AND FACTORY OVERHEAD WHICH IS NOT SPECIFICALLY
IDENTIFIABLE WITH ANY OF THE PRODUCTS BEING SIMULTANEOUSLY
PRODUCED

JOINT PRODUCTS AND BY-PRODUCTS
JOINT PRODUCTS
❑ The products must be the
primary objective of the
manufacturing operations.
❑ Sales value must be relatively
high if compared with the
products resulting at the same
time period.
BY PRODUCTS
❑ The product is not the primary
objective of the manufacturing
operations.
❑ Sales value of the by-product is
comparatively low as compared
with the sales value of the main
product.

ACCOUNTING METHODS FOR
MAIN PRODUCTS
❑ PHYSICAL OUTPUT METHOD/ AVERAGE UNIT COST METHOD
❑ MARKET VALUE AT SPLIT-OFF METHOD
❑ NRV METHOD (APPROXIMATED MARKET VALUE AT SPLIT-OFF)

PROBLEM # 1
1.