b A second method that could be used in conjunction with a is to have a stock holding charge. If managers buildup stock, they would be penalised. This would reduce incentives to use stock to manipulate reported income to meet target ratios. 6.20 Alternative joint-cost-allocation methods, further process decision. (40 min) A diagram of the situation is in Solution Exhibit 6.20. 1 Methanol Turpentine Total Physical measure of production (litres) 2,500 7,500 10,000 Weighting 2,500 10,000 = 0.25 7,500 10,000 = 0.75 Joint costs allocated, MT 2 Methanol Turpentine Total Expected final sales value of production, MT Deduct expected separable costs to complete and sell, MT Estimated net realisable value at split-off point €45,000 €90,000 €135,000 Weighting , , €45 000 €135 000 = 3 1 , , €90 000 €135 000 = 3 2