Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Home
  • Accounting, Taxation, and Reporting
  • Managerial & Financial Accounting & Reporting

Joint Products and Joint Costs - Explained

What are Joint Products and Joint Costs?

Written by Jason Gordon

Updated at April 7th, 2022

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Professionalism & Career Development
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Courses
+ More

Table of Contents

What are Joint Products?What are Joint Costs? The Physical Quantities MethodThe Sales Value Method

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
sales value method physical quantities method joint product joint cost

Was this article helpful?

Yes
No

Related Articles

  • Fixed Asset - Explained
  • Differential Analysis (Accounting) - Explained
  • Net Cash Flow - Explained
  • Statement Cash Flow - Explained



©2011-2021. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand