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BUS 630 week 3 DQ 1 Allocating Joint Costs

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BUS 630 week 3 DQ 1 Allocating Joint Costs
When cost accounting, you want to select a
method to plan and budget for joint costs.
Choosing a method helps you know where you
stand during joint production. You can assess if
your actual joint costs are on track with your
budget. If you’re off track, you can make changes.
The splitoff method in cost accounting
The splitoff point is the point when the costs of two
or more products can be separately identified.
After splitoff, each product incurs separable (or
independent) costs. Allocating joint costs using
sales value at splitoff may be the most effective
method for planning and budgeting for joint costs.
Here are several reasons why:
The method relates the benefit of production
(revenue of sales value at splitoff) to the related
expenses.
No information on separable costs is required.
The sales value at splitoff may be the best
comparison of the products. At that point, you’re
making an apples-to-apples comparison.
Sale value at splitoff isn’t affected by other
production or costs after splitoff. A product’s sales
value after separable costs have been incurred

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