BUSI 3008 Lecture Notes - Lecture 7: Sunk Costs, Mulch
6 Dec 2016
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Document Summary
Byproduct an output from a joint production process that has a lower sales value compared to the main or joint process. Joint cost the cost of a single manufacturing process that leads to multiple products. Split off point when process turns into multiple products. Main product products the company intended on producing. Joint costs cutting down trees, bringing them back to saw mill. Split off point trees have been processed into unique separate products. Separable cost cost of staining or cutting 2x4. Byproduct mulch or wood chips produced while processing the 2x4 further. Calculation of inventoriable costs and cogs for accounting and tax reporting. Physical measures: allocate using tangible attributes of the product (pounds, kg, # of units, etc. ) Market- based: allocate using market-derived data (dollars: sales value at splitoff, net realizable value (nrv, constant gross-margin percentage nrv. Allocates joint costs on the basis of their relative proportions at the splitoff point: use a common physical measure (weight, volume, etc. )
