JOINT

and

BY PRODUCT
COSTING
Methods of Allocating Joint Production
Cost

1. Market or Sales Value Method

2. Physical Measures (Units Produced)
Method
The Smile Company produced three joint products at a joint cost of P 132 000. Additional
information for a recent period is as follows:

If processed further
Sales
Units Sales Additional
Product Value at
Produced Value Costs
SO
A 13,200 P88,000 P121,000 P19,800
B 8,800 77,000 99,000 15,000
C 4,400 55,000 66,000 11,200

Allocation based on Sales Value at split-off

Product A (88000/220000) * 132000 52,800

Product B (77000/220000) * 132000 46,200

Product C (55000/220000) * 132000 33,000

132,000
The Smile Company produced three joint products at a joint cost of P 132 000. Additional
information for a recent period is as follows:

If processed further
Sales
Units Sales Additional
Product Value at
Produced Value Costs
SO
A 13,200 P88,000 P121,000 P19,800
B 8,800 77,000 99,000 15,000
C 4,400 55,000 66,000 11,200

Allocation based on Net Realizable Value after Final Processing

Product A (101200/240000) * 132000 55,660

Product B (84000/240000) * 132000 46,200

Product C (54800/240000) * 132000 30,140

132,000
The Smile Company produced three joint products at a joint cost of P 132 000. Additional
information for a recent period is as follows:

If processed further
Sales
Units Sales Additional
Product Value at
Produced Value Costs
SO
A 13,200 P88,000 P121,000 P19,800
B 8,800 77,000 99,000 15,000
C 4,400 55,000 66,000 11,200

Allocation based on Physical Units

Product A (13,200/26,400) * 132000 66,000

Product B (8,800/26,400) * 132000 44,000

Product C (4,400/26,400) * 132000 22,000

132,000
Accounting Method for By Products

1. Joint Production Cost is not

Allocated
2. Some portion of the Joint
Production Cost is Allocated to the
By Product