Chapter 9 Joint Product and By-Product Costing Key Topics: –Joint processes and common costs Main products and byproducts –Allocation methods –Choosing.

Slides:



Advertisements
Similar presentations
Cost Allocation: Joint Products and By-products
Advertisements

© 2009 Pearson Prentice Hall. All rights reserved. Cost Allocation: Joint Products and Byproducts.
Cost Allocation: Joint Products and Byproducts
© John Wiley & Sons, 2005 Chapter 9: Joint Product and By-Product Costing Eldenburg & Wolcott’s Cost Management, 1eSlide # 1 Cost Management Measuring,
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
Copyright © 2003 Pearson Education Canada Inc. Slide Chapter 15 Cost Allocation: Joint Products and Byproducts.
Cost Allocation: Service Department Costs and Joint Product Costs
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin Chapter Seven.
Contrôle Interne Avancé-HEC Lausanne- 2007/ Thème 5 Cost Allocation: Joint Products and Byproducts.
Copyright © 2015 Pearson Education, Inc. All Rights Reserved. Cost Allocation: Joint Products and Byproducts.
Chapter 9 Joint Product and By-Product Costing Key Topics: –Joint processes and common costs Main products and byproducts –Allocation methods –Choosing.
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Constant Gross-Margin Percentage NRV Method Step 2: Deduct.
Cost Allocation: Joint Products and Byproducts
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Cost Allocation: Joint Products and Byproducts Horngren, Foster &
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Cost Allocation: Joint Products and Byproducts Chapter 16.
Cost Allocation: Joint Products and Byproducts Chapter 16.
Allocation of Support Activity Costs and Joint Costs
Hilton Maher Selto 9 Joint-Process Costing McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.
2009 Foster School of Business Cost Accounting L.DuCharme 1 Cost Allocation: Joint Products and Byproducts Chapter 16.
Departmental Accounting Chapter Preparing income statements focusing on gross profit by departments. Learning Objective 1.
Accounting for losses and scrap in process account
1. Describe and illustrate income reporting under variable costing and absorption costing. 2. Describe and illustrate income analysis under variable costing.
Chapter 12. Cost Concepts for Decision Making A relevant cost is a cost that differs between alternatives. 1 2.
COST MANAGEMENT Accounting & Control Hansen▪Mowen▪Guan COPYRIGHT © 2009 South-Western Publishing, a division of Cengage Learning. Cengage Learning and.
Chapter 15 Accounting Information for management decisions.
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 9 Joint-Process Costing.
Cost Management ACCOUNTING AND CONTROL
CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 15-1 Cost Characteristics That Influence Decisions.
Cost Allocation: Joint Products and By-products ACCT7320 Dr. Bailey Tuesday, February 17, 2009.
Cost Allocation: Joint Products and By-products Chapter 15.
©2003 Prentice Hall Business Publishing, Cost Accounting 11/e, Horngren/Datar/Foster Cost Allocation: Joint Products and Byproducts.
CHAPTER 16 Cost Allocation: Joint Products and Byproducts.
Lecture 29 Estimated Net Realizable Value (NRV) Method.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
The Islamic University –Gaza
Cost Allocation: Joint Products and By-products
Cost Accounting Traditions and Innovations Barfield, Raiborn, Kinney Chapter 9 Cost Allocation for Joint Products and By-Products.
Service Department and Joint Cost Allocation
Joint Products. Joint products are main products that are results form manufacturing operations in which companies produce two or more products of significant.
The Islamic University –Gaza
© 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license.
Cost Allocation: Joint Products and Byproducts
Joint Product and By-Product Costing Key Topics: –Allocation methods –Choosing a method –Using joint cost allocation information Decisions to process further.
Chapter 11 Allocation of Joint Costs and Accounting for By-Products
IES 342 Industrial Cost Analysis & Control | Dr. Karndee Prichanont, SIIT 1 Cost Allocation: Service Departments & Joint Product Costs Chapter 12 Objectives:
Management and Cost Accounting, 6 th edition, ISBN © 2004 Colin Drury MANAGEMENT AND COST ACCOUNTING SIXTH EDITION COLIN DRURY.
Lecture 28. Lecture Overview Splitoff Point Joint Products and By-products Why Allocate Joint Products? Approaches to Allocating Joint Costs Sales Value.
Crosson Needles Managerial Accounting 10e Short-Run Decision Analysis 9 C H A P T E R © human/iStockphoto ©2014 Cengage Learning. All Rights Reserved.
Contribution Margins. Cost-volume-profit Analysis: Calculating Contribution Margin Financial statements are used by managers to help make good business.
Starter Answer the following: 1.Breakeven is important for a business because? 2.Give 2 pros and cons of working out what a business needs to break even.
CHAPTER 9: JOINT PRODUCT AND BY- PRODUCT COSTING Cost Management, Canadian Edition © John Wiley & Sons, 2009 Chapter 9: Joint Product and By-Product Costing.
Chapter 10 Service Department and Joint Cost Allocation.
The McGraw-Hill Companies, Inc. 2006McGraw-Hill/Irwin 9 Joint-Process Costing McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.
Joint-Process Costing
Cost Allocation: Joint Products and Byproducts
Cost Allocation : Joint Products and Byproducts
Hilton • Maher • Selto.
Managerial Accounting: An Introduction To Concepts, Methods, And Uses
Cost Allocation: Joint Products and Byproducts
Cost Allocation: Joint Products and Byproducts
Cost Allocation: Joint Products and Byproducts
Service Department and Joint Cost Allocation
Understanding Accounting and Financial Information
© 2017 by McGraw-Hill Education
AMIS 310 Foundations of Accounting
Cost Allocation: Joint Products and Byproducts
Cost Allocation: Joint Products and Byproducts
Chapter 16 Joint Costs.
Joint and by-product costing
Cost Allocation: Joint Products and Byproducts
Presentation transcript:

Chapter 9 Joint Product and By-Product Costing Key Topics: –Joint processes and common costs Main products and byproducts –Allocation methods –Choosing a method –Using joint cost allocation information Decisions to process further Choosing a method Uses of joint costing information

Joint Processes and Common Costs Jointly produce more than one product Joint (common) costs cannot be traced to individual products Joint production ends at the split-off point Individual products might or might not be processed beyond the split-off point

Main Products and Byproducts

Allocation Methods Physical output Sales at split-off point Net realizable value Constant gross margin NRV

Physical Output Method Allocate joint costs in proportion to the physical output for each main product Examples of physical measures: meters, pounds, gallons All main products must be expressed in the same physical measure

Sales at Split-Off Method Allocate joint costs in proportion to the sales value for each main product at the point where joint production ends Not always possible to measure sales value at the split-off point

Net Realizable Value Method Allocate joint costs in proportion to the net realizable value for each main product, taking into account the final selling price and separable costs Same as the sales value at split-off method if there is no additional production beyond the split-off point

Constant Gross Margin NRV Method Allocate joint costs so that the gross margin for all main products is the same –First, calculate combined gross margin for all main products –Second, calculate joint cost allocation that will result in the same gross margin for all main products, taking into account the final selling price and separable costs

Allocating Joint Costs The Paint Palette Company produces two products: premium and regular paint. Joint costs are $10,000 per batch of 1,000 gallons, 30% premium and 70% regular. If Paint Pallet sold the products at split-off, it would receive $10.00 per gallon for premium and $5.00 per gallon for regular. When the paint is processed further, the separable cost per gallon for premium is $4.00 and for regular is $1.00. Price per gallon after further processing for premium is $20.00 per gallon and for regular is $10.00 per gallon.

Allocating Joint Costs Allocate the joint costs using the following methods: –Physical units –Sales at split off –NRV –Constant gross margin

Decisions About Processing Further Regular paint can be processed further into a paint that dries extremely quickly. The new selling price is $22 per gallon and separable costs increase to $12 per gallon. What is the contribution of the new product? Should regular paint be processed further?

Choosing a Method Major Goal Avoid distortion of individual main product values

Uses of Joint Cost Information Financial statements Income tax returns Government regulatory reports Other external reports

Physical quantities Sales value at split-off point Sales prices if processed further Separable costs Joint costs are irrelevant for many types of decisions Estimations (Uncertainties) in Allocations