Mana的gement Accounting Ch12_Stu.ppt

* We can also use the relative-sales-value method when we cannot sell one or more of the joint products at the split-off point. The weighting is based on the sales values of the individual products as a percentage of the total sales value at split-off. * When weighting is based on the sales value of the individual products, the allocation of a cost to one product depends upon the sales value of both products. Relative Sales Value at Allocation Split-off Point Weighting of Joint Costs X $ 90,000 (90/120)X$100,000 $ 75,000 Y 30,000 (30/120)X$100,000 25,000 $120,000 $100,000 * By-product is a product that, like a joint product, is not individually identifiable until manufacturing reaches a split-off point. By-products differ from joint products because they have relatively insignificant total sales values in comparison with the other products emerging at split off. In contrast, joint products have relatively significant total sales values at split off in comparison with the other jointly produced items. * If we account for an item as a by-product, we allocate only separable costs to it. We allocate all joint costs to the main products. We deduct any revenues from by-products, less their separable costs, from the cost of the main products. * A good cost-allocation scheme would allocate only the $120,000 to the consuming departments and would let the $20,000 remain as an unallocated unfavorable budget variance of the computer department. This scheme holds computer department managers responsible for the $20,000 variance and reduces the resentment of user managers. * The cost-allocation base for the fixed-cost pool is the predicted amount of capacity needed by the two schools when the university acquired the computer facilities, measured in monthly hours of usage. Fixed costs are allocated as follows: predicted percent of capacity needed X total budgeted fixed cost