December 8, 2011

Cost Allocation: Joint Products and By Products - Review Notes

In certain process joint products are produced. As a simple example, support a truck is hired by a company and ten different products are transported on it. Accounting system has task of allocating a portion of the cost of the truck to each product on a rational basis.

Similarly when a main product and a byproduct with some value are produced, accountants have to use a logical basis to allocate costs.

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