DESCRIBE briefly, how joint costs upto the point of separation may be apportioned amongst the joint products under the following methods: (i) Market…
CA Intermediate · Cost and Management Accounting · MTP · May 2025
DESCRIBE briefly, how joint costs upto the point of separation may be apportioned amongst the joint products under the following methods: (i) Market value after further processing (ii) Net realizable value method
Suggested Answer and Working Notes:
(i) Market Value after further Processing: Here the basis of apportionment of joint costs is the total sales value of finished products at the further processing. The use of this method is unfair where further processing costs after the point of separation are disproportionate or when all the joint products are not subjected to further processing. (ii) Net Realisable Value Method: Here joint costs is apportioned on the basis of net realisable value of the joint products, Net Realisable Value = Sale value of joint products (at finished stage) - estimated profit margin - selling & distribution expenses, if any - post split off cost
Topics: Joint Products and By Products
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