Joint Cost Allocation
To use this method, absolutely divide the complete manufacturing price by means of the gorgeous measure of output extent to yield the value per unit of output.
One type of monetary measure of joint value allocation is the income fee method.
For example, the fee of fertilizing and harvesting sunflowers qualifies as a frequent cost. If a organisation uses the kernels in two or more exclusive processes – such as roasting and crushing – the charges turn out to be joint costs.
Another instance of joint costing is feeding each sheep and cattle.
The two predominant techniques of allocating joint expenses are (1) the net realizable fee technique and (2) the physical portions method. The net realizable price method allocates joint charges to merchandise based totally on their internet real- izable values at the split-off point.
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