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

Thesplitoffpoint 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 (revenueof sales value at splitoff) to the related expenses.

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