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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
Process Oil Gasoline Chemicals Split-Off
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
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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