COMM-2016EL Study Guide - Final Guide: Jet Fuel
29 Oct 2017
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Document Summary
In some industries a number of products are produced from a single raw material input. For example, in the petroleum industry a large number of products are extracted from crude oil, including gasoline, jet fuel, home heating oil, lubricants and various other chemicals. The raw material goes through processing and during the production process products become separately identifiable products, this point is called split off point. The products produced during this processing state are called joint products. An important decision for the producer at the split off point is whether to sell the products identified or to process some of these products further. All costs incurred up to split off point are called joint costs. Joint costs are common costs that are incurred to simultaneously product a variety of products. Remember from previous chapters, if costs of product is not traceable the allocation should be avoided, similar to fixed costs.
