MGAC03H3 Chapter 15: Chapter 15 Notes

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18 Oct 2011
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The sales value at splitoff method does not presuppose an exact: availability of meaningful common denominator to compute the weighting factors. The denominator of the sales value at splitoff method (dollars) is a meaningful one. In contrast, the physical measure method may lack a meaningful common denominator for all the separable products: simplicity. The sales value at splitoff method is simple. In contrast, the estimated nrv method can be very complex in operations with multiple products and multiple splitoff points. The total sales value at splitoff is unaffected by any change in the production process after the splitoff point. Chapter 15 cost allocation: joint products and by-products notes. Approaches to allocating joint costs there are two basic approaches to allocating joint costs: Joint products have high total sales value at the splitoff point. A byproduct has a low total sales value at the splitoff point compared with the sales value of a joint or main product.

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