What are Joint Products?
Two or more products made from a single input are called joint products.
The costs of the single input and related manufacturing process costs must be allocated to each of the joint products.
What are Joint Costs?
The cost of this single input and the related manufacturing process costs are called joint costs.
Two methods are commonly used to allocate these joint costs to the joint products:
- the physical quantities method and
- the sales value method.
The Physical Quantities Method
The physical quantities method allocates joint costs based on a physical measure of output.
The Sales Value Method
The sales value method allocates joint costs based on the relative sales value of each product at the split-off point.
This method also ensures that joint costs allocated to each product will not exceed sales revenue for each product (unless total joint costs are higher than total revenue).
Related Topics
- Job Costing vs Process Costing
- Assign Direct Material and Direct Labor to Job
- Assign Manufacturing Overhead Costs to Job
- Assign Overhead Costs to Products
- Plantwide Cost Allocation
- Department Cost Allocation
- Activity-Based Costing
- Weighted-Average Cost of Products
- Production Cost Report
- Fixed, Variable, and Mixed Cost Estimations
- Contribution Margin Income Statement
- Cost-Volume-Profit Analysis
- Margin of Safety
- Contribution Margin per Unit of Constraint
- Absorption Costing vs Variable Costing
- Differential Analysis and Decisions
- Cost Decisions for Joint Products
- Capital Budgeting
- Life Cycle Costing
- The Master Budget
- Activity-Based Budgeting
- Standard Costs
- Imputed Value
- Variance Analysis for Product Costs
- Absorption Pricing
- Price Variance
- Absorption Variance
- Responsibility Centers
- Comparing Segmented Income
- Using ROI to Evaluate Performance
- Using Residual Income to Evaluate Performance
- Use Economic Value Added to Evaluate Performance
- Transfer Pricing