成本会计-chapter07.docVIP

CHAPTER 7 Joint Product and By-Product Costing LEARNING OBJECTIVES After studying this chapter, you should be able to: 1. Identify the characteristics of the joint production process. 2. Allocate joint product costs according to the benefits-received approaches and the relative market value approaches. 3. Describe methods of accounting for by-products. 4. Explain why joint cost allocations may be misleading in management decision making. 5. Discuss why joint production is seldom found in service industries. CHAPTER SUMMARY This chapter describes the joint production processes and their outputs—joint products and by-products. Several methods are developed to allocate joint costs to joint products. By-products are not usually allocated any of the joint costs. Instead, noncost methods are frequently used to account for by-products. This chapter concludes with the caution that allocated joint costs are not useful for output and pricing decisions. Further processing costs are used in management decision making. CHAPTER REVIEW I. General Characteristics of Joint Production Joint products are two or more products produced simultaneously by the same process. Joint products become separate and identifiable at the split-off point. Review textbook Exhibit 7-1, which depicts the joint production process. A. Cost Separability and the Need for Allocation 1. Joint costs are the total of the raw material, labor, and overhead costs incurred up to the initial split-off point. a. Joint costs can be allocated to the final product only in some arbitrary manner because such costs cannot be traced directly to the products they benefit. b. Joint cost allocation is performed to meet the requirements of financial reporting (GAAP) and federal income tax law for income measurement and inventory valuation. In addition, joint cost allocation is useful in costing for government cost-type contracts and in justifying prices for legislative or administrative regulations. c. Joint cost allocati