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COMM-2016EL Study Guide - Final Guide: Jet Fuel


Department
Commerce and Administration
Course Code
COMM-2016EL
Professor
Kayla Levesque
Study Guide
Final

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Joint Cost and processes
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.
Joint Costs
Split off point
Selling Price $160,000 $240,000 $90,000
Wool
C ost $500,000
S uperfine
Wool
S P
$50,000
Fine Wool
S P
$125,000
C oarse
Wool
S P
$100,000
S eparation
Process
$50,000
Dying
$30,000
Dying
$50,000
Dying
$5,000
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