Q85. What are the various methods for appointment of joint expenses between joint products?
- Physical Unit Method: In this method, joint cost are apportioned over the joint product in the ratio of quantity at separation point.
- Average Unit Cost Method: In this method, cost is divided by total units of joint products. On division, average cost per unit is obtained. Then each joint product quantity is multiplied with such joint cost per unit, which gives share in joint cost of each joint product.
- Survey Method: This Method is also known as point value method. It is based on technical survey of all the factors involved in the production and distribution of joint products. Joint cost is apportioned in the ratio of point value assigned to each product.
- Contribution Margin Method: According to this method, joint cost are divided into fixed and variable. Variable cost are are allocated in the ratio of quantity and separation point and fixed cost are allocated in the ratio of contribution of each product.
- Market Value At Separation Point: In such method, all joint cost are divided over joint product on the basis of market value of joint product at the point of separation.
- Market Value After Further Processing: It is same as above method. Only difference is that it uses market value of products after further processing and not at the of separation. If more further processing it’s done then market value of such product at the point of separation will be taken as market value after further processing.
- Net Realizable Value Method: Net realizable value can be arrived by detecting sales value further processing the following items:
- Selling And distribution expense
- Separate expenses.