Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed



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C HAP TE R 6
Cost allocation joint-cost situations
Teaching tips and points to stress
Meaning of joint products and byproducts terms
The discussion in Chapter 6 of joint costs and byproducts is a special case of allocating common costs to products. The joint costs are caused by the decision to produce the market basket of products. Joint-costing problems are particularly troublesome because it is not feasible to apply the cause-and-effect criterion. If a product yields only one product with a relatively high sales value, that product is termed a main product. The term joint product is reserved for cases where the production process yields multiple high sales value products.

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