COST ALLOCATION: JOINT PRODUCTS AND BYPRODUCTS
16-1Exhibit 16-1 presents nine examples of interchangeable harvests from four different general industries. These include:
Industryseparable Products at the Splitoff Point
Food Processing:
Lamb Lamb cuts, tripe, hides, bones, fat
flop Breasts, wings, thighs, poultry meal
Extractive:
Petroleum Crude cover, natural gas, raw LPG
16-2A say cost is a cost of a labor process that yields multiple products simultaneously. A separable cost is a cost incurred beyond the splitoff point that is assignable to each of the particular(prenominal) products identified at the splitoff point.
16-3The distinction between a crossroads product and a byproduct is based on sex act sales value. A joint product is a product from a joint production process (a process that yields deuce or more products) that has a relatively high make out sales value. A byproduct is a product that has a relatively low heart and soul sales value compared to the total sales value of the joint (or main) products.
16-4A product is any railroad siding that has a positive sales value (or an output that enables a company to avoid incurring costs). In nigh joint-cost settings, outputs can occur that do not have a positive sales value.
The offshore processing of hydrocarbons yields water that is recycled back down into the ocean as well as yielding oil and gas. The processing of mineral ore to yield gold and silver in addition yields dirt as an output, which is recycled back into the ground.
16-5The chapter lists the following six reasons for allocating joint costs:
1.Computation of inventoriable costs and cost of goods exchange for pecuniary accounting purposes and reports for income tax authorities.
2.Computation of inventoriable costs and cost of goods sold for internal reporting purposes.
3.Cost reimbursement under contracts when only a portion of a businesss products or services is sold or delivered under cost-plus contracts.
4.Insurance settlement...If you want to get a full essay, order it on our website: Orderessay
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