Cost Allocation Methods for Joint Products and By-products

Stoyan Deevski
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Stoyan Deevski: University of National and World Economy, Sofia, Bulgaria

Economic Alternatives, 2016, issue 1, 64-70

Abstract: The purpose of this paper is to look into the problems of costing of joint products and by-products in industrial organizations. The paper starts with an introduction to the problem of allocating joint costs (common costs up to the split-off stage) to products. The author defines the basic terms of joint products, by-products, common and joint costs and analyses how the problems of costing can be approached. Two approaches are discussed for joint products cost allocation and two approaches for by-products cost allocation. The author presents adapted methods for costing within those approaches and discusses the situations in which those will be most appropriate to apply. The paper concludes with a note on the importance of using proper methods for cost allocation of joint products and by-products as part of the broader management process of ensuring long-term profitability of the industrial organizations

Keywords: cost allocation; joint products; by-products (search for similar items in EconPapers)
JEL-codes: M40 M41 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:nwe:eajour:y:2016:i:1:p:64-70

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