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ACTG2020_Week5 2014 Ch12CMD (1)

A 50 b 10 c 15 d 29 lo 2 joint costs in some

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Unformatted text preview: a single raw material input. Two or more products produced from a common input are called joint products. joint products The point in the manufacturing process where each joint product can be recognized as a separate product is called the split-off point. split-off point LO 2 Joint Products Joint Costs Joint Input Common Production Process Oil Gasoline Chemicals Split-Off Point Separate Processing Final Sale Final Sale Separate Processing Separate Product Costs Final Sale LO 2 The Pitfalls of Allocation Joint costs are often allocated to end products on the basis of the relative sales value of each product or on some other basis. Although allocation is needed for some purposes such as balance sheet inventory valuation, allocations of this kind are very dangerous for decision making. LO 2 Sell or Process Further Joint costs are irrelevant in decisions regarding what to do with a product from the split-off point forward. It will always be profitable to continue processing a joint product after the split-off point so long as the incremental revenue e...
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