{A joint process produces more than one product line. A product that has'a sale ‘value resulting froma joint process is classified as (1) a joint product, (2) a by-product ‘or (3) scrap. Joint products are the primary outputs of a joint process, each joi ‘product has substantial revenue generating ability. Joint products arc the main reasoa ‘why a comipaity enters info the production process. These products are also called the ‘main products. On the other hand, by-product and scrap arc those that come out incidental to the joint process, Both are salable, but their sales value alone would not bbe sufficient for management to justify under taking the joint process. For example Dunkin” Donuts will never under take doughnut manufacturing to generate the doughnut holes (munchkins) sold to customers Bacolod Sugar Mills would never ‘undertake sugar cane processing simply to generate motasses,cma Dey Syst emanating pers E Suave atte eve Se anya a Te a eerste Fe et ape os re ey reread 38) ir cs (BRASH ee snomre PTE ed et hee Sc, RSH cman ctrng opens. fe serpy tow as copared wat cle UNTING FOR Jonvr, Perpotit one oes eo ERONUCTS india prods in drt determine the Bs ed re at ihe winds trenccg ie ee eee coe ee et Ms neanedewler spats Weainct ee ee Ahewlore, an appropriate method mee cee ro eS fete voloe ot splay UNTING METHODS FOR MAIN PRODUCTS Fy Physical output method! Average unit cost melind 2 Market value t spliff method 3 Netrealizable value method (appcoxinested markt vale at spliff)Prblen to tetra the accounting methods for man products Fiities Occpa Average unit cont nethod 5 Frojuts Produced Costs Salter Prgcsang Cass “MV ‘Mited in the same scale. . ese ite Y Purtas ‘tio of cutout pe pret over a 3x00 | eo 7.80 32.00 1000 i cst ound mech erodet ty mito eet et tue! otk © 20000 5000 9.80. 35,00 1400 uted by ‘tala: com ‘Using the information from the illustrative problem, the following joint ost allocation ismade Product A=28,009 x 164,000 = P 36,000 82,000 Produet B= 43,000 x 164,000= 68,000 $2,000 Product C=20.000 x 164,000 = _40,000 #2,000 p.168,000 “The total production costs ofa pric are computed 2s follows: j Units Costs Sharein Additional al Production Proxluct Produced er Unit Joint Cost 1 | Coss a 28.00 P5600 P 30,00 P 106.000 34,000 8.00 98,000 PoLes00 So‘treatable value method (approximated marhet vale at spliff) sown at the pin it should be ase tallest the io eT besail, tonal procesing ox tence best approach to allocate oit fl rk ale at split. Under dapat costs are dele fon. meh poe is Somat asst Wher the market value Bot costs, 13 ivstrated in the Pe Pots are not salable atthe split-o Tithe igcured. When this stution oo ‘acing he bo ealza sai Method, any estimates fra sales value. The jet © fonda cn the vest Pa q tcp. 9 008 “him con aocned ~ 13 STE pes Bach pract, TO le met ton) proeesiE et alation © © SE eras win sarin ent fan eB eel Jere peat Prodat A = 268000 x 165000 = 53.797 A170 Prose B = 302009 x 164,000 = 62,027 17000 Protest ¢ = 1640 = 4s, 176 ' “The tetalpradcton ste af praaet are compted 38 fellows A 24000 1150 322000 30.000 4,000 268,000 B 30 1000 34nn00 30000 100 308,000 € 2000 14.00 240.000 35,000 5.000 240.000 on ‘30.000 115.000 ino) 417,60 AH) 270,000ILLUSTRATIVE PROBLEM — (oo addkional processing cost) Allocation of isin om join prodects Frances mans dee Jt produc fom a jim proccss. Ths flowing ‘atau epost Seca Protos Unie rodiod MY a Splivott aso Pha, 8 som hy © tom soo Allocate he jit wat 42,00 wt alec meta aoe sn on etd soueT10N Prk value method MV oss Unis 90 ® 5000 tay Talay B 300 600 iso fF te Tol MY Peenigs Shun ae a ox E i aim ‘6000 Pao Te comtaton ofthe perccnage may be dene aig diferent neta. The iebodis fo cv ite the market ales ofeach peducte nen 7. 187 #070. I this method eis na prea hat wre tot eat rn te tae awed may be used. 4270 ~ 9% The esr prelate second ct Sally the cox rate therein, gree pei as ral fe procs the she © Average unit cost method Bra itcProfuced Average UnitCat Shue ont. Cost x sco “aa 20 a 3000 oo iain — daa pasos ee ee as Tie eweage unit ccst is computed by vg he wa jit Fates 000 10,000" 420 Fortis prob, n as mia 9 hapACCOUNTING FOR BY-PRODUCTS nil ma omen omc to 4 1: meson efor, BON tig pts, 4 So a fon rt real str comme aman Sne tec yee te at ot Inlet he pox of Med sing tl he wn forma el cased Mw a ABIDE stg 8 rin pice TER dosed te yy fal odetion cost of the min peau ne YP i da : al chars By oa coo Fe Ge a Laie ome see soc ten ett. Mormon ee somes, yatta cnr some br telomeres sil toon pcan Sst a fee crc ay Oe wee oe AGENTS Sst gnnte oi the main proce rocemang cnt ae cxporacd whem mcod id disposal costs are expensed at "Kise che net by-product come is significant and therofore camideed Sea a SES rp anced hte incon nace ws te man pati ele Tec bythe Cxesed va of te by ree a sa et ha a See eee ee Staion1b. Net revense from by-praduct shown at deduction from cost of goods sold in product Seles 400000 ess. Cost of Goods Solt Drea macrals F 120000 Direc bor 100,000, Factan ores 0.00 ‘Teal manafacurng cos, 300,00 Lese Inventor, January3! 60,000 Gost of goods sld 240.000 Less. Revene ftom y-pedact__ 10,000 Geos profit Lose Selling & Administrative Na incon E 230.000 170,000 20000 30,000 ‘Net revenue from by-predact is shown as other income: aks P Ti Coxt of Gots old Dict mates r Diet tor Ficon evrheas ‘Tl masfacunne et ie eset, 31 Gree Bote ie Salling and amine osetia "acvens ton by-prohet 400.000 120000 Yoo.000 50.000 300,000 0.009 = Mee wun te ne af mt ie Pee haat meet tan nr ee i Histo and ths caused the net incor 2 Nat revenue from by-product shown asd Meare ae ey godt hw a deduction rom a mameacring Saks as Cost of Gods Soll labor Factory Ovarian Total masta cost Us. Hevea fom bpd Nat manafactring cot Las inventory, January 318000, Gross profit Lise Seling and Admirisative 4 s.o00 55000