Physical Measurement Method: Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume. Formula to allocate joint cost as per physical measure method: Cost allocated to joint product = Quantity of product Total quantity of production × Total joint cost Net Realizable Value (NRV) Method: NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products. Formula to allocate joint cost as per NRV method: Cost allocated to joint product = NRV of product Total NRV of production × Total joint cost Where, NRV = Sales value − Cost of further process or sell To compute: Allocation of joint cost as per physical measure method:
Physical Measurement Method: Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume. Formula to allocate joint cost as per physical measure method: Cost allocated to joint product = Quantity of product Total quantity of production × Total joint cost Net Realizable Value (NRV) Method: NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products. Formula to allocate joint cost as per NRV method: Cost allocated to joint product = NRV of product Total NRV of production × Total joint cost Where, NRV = Sales value − Cost of further process or sell To compute: Allocation of joint cost as per physical measure method:
Rules by which an authority (usually a government) imposes a financial obligation on individuals or organizations within its domain. Property or transactions can be taxed. While taxes are primarily intended to fund the operation of a government, many tax laws are created to encourage or discourage certain behaviors by citizens or companies.
Chapter 16, Problem 16.26E
1. a.
To determine
Physical Measurement Method:
Physical measurement method is a process of joint cost allocation which apportions joint cost on the basis of number of units or physical volume.
Formula to allocate joint cost as per physical measure method:
Cost allocated to joint product=Quantity of productTotal quantity of production×Total joint cost
Net Realizable Value (NRV) Method:
NRV method is a method of joint cost allocation which takes into consideration additional costs required to be incurred in the further processing of the products.
Formula to allocate joint cost as per NRV method:
Cost allocated to joint product=NRV of productTotal NRV of production×Total joint cost
Where,
NRV=Sales value−Cost of further process or sell
To compute: Allocation of joint cost as per physical measure method:
1. b.
To determine
To compute: Allocation of joint cost as per NRV method.
2.
To determine
To compute: Operating income as per Physical measure method and NRV method.
3.
To determine
To identify: Pros and cons of physical measure method and NRV method.
