ACCT 202 Exam 2
Net realizable value (processed beyond the split)
(Final selling price x Quantity) - Additional Processing Costs
3 methods to allocate costs
- Direct Method - Sequential Method - Reciprocal Method
Allocated costs
Janitorial Department costs x usage Percentage
Joint cost allocation
Percent of total net realizable value x Joint cost
Net realizable value (not processed beyond the split)
Selling price at split-off x Quantity
Total Market value at split-off point
Split-off Quantity x Estimated selling Price per pound at Split-off point
Split-off point
That point in production where the joint products become separable.
Joint costs
The costs incurred in a joint manufacturing process
Joint products
The outputs generated from the joint manufacturing process.
Activity based costing
Used to apply overhead to products, support department costs referred to as support activity costs. (similar to multiple production dept.)
Single plantwide rate
Used to apply overhead to products, support departments, costs are simply combined with all other overhead costs
Joint manufacturing process
When a single manufacturing process generates multiple outputs
Support department
A department that provides necessary service to produce a product, but isn't directly involved in the production process.
Weighted average method
Allocates joint costs based on weight factors for each product.
Net realizable value method
Allocates joint costs using each product's estimated net realizable value after it is fully processed.
Market value at split-off method
Allocates joint costs using each product's total market value at the split-off point,
Multiple production dept. rates
Apply to overhead to products, support department costs are first directly traced or distributed to support and production departments.
Reciprocal method
Considers all inter-support-department services, and is the most accurate of all. Most difficult and is most Accurate.
Sequential method
Considers some inter-support-department services. Moderately difficult and is moderately accurate.
Joint costs
Direct Materials + Direct Labor + Overhead
Direct method
allocates all support department costs directly to production departments. Easy to calculate and is least accurate
Physical units method
allocates joint costs using a physical measure of the products at the split-off point, such as pounds, gallons, or inches.