Concept explainers
Give two examples of industries in which joint costs are found. For each example, what are the individual products at the splitoff point?
Joint Cost:
Joint cost is a cost accounting term, which is referred to common costs incurred in purchasing or in the process of producing multiple products.
Split-off Point:
Split-off point is the point in production process where joint products are capable of being distinguished individually.
To identify: Examples of industries in which joint costs are found.
Answer to Problem 16.1Q
Given below are the examples of industries where joint costs are found:
- Dairy Food Industry – Products are milk, cream, butter, cheese yogurt, whey and milk powder
- Sugar industries – Products are sugar, brown sugar, bagasse and molasses, rum and filter cake.
Explanation of Solution
- Joint costs are incurred in combination and therefore it is difficult to identify the cost of individual products.
- Whereas after split-off point it is easy to identify the costs of products individually.
Hence, dairy food industry and sugar industry are one of the industries where joint costs are found.
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Chapter 16 Solutions
MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Cost Accounting
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