Cost-plus pricing when joint costs are present

Arnold Schneider

Omega, 1985, vol. 13, issue 6, 555-559

Abstract: Companies using cost-plus pricing often produce products that entail joint cost allocation. A problem they have encountered is that, while product prices are a function of the full cost, joint cost allocation methods using net realizable values depend on the product prices. This paper shows that when all costs and production quantities are known (or can be budgeted), it is possible to simultaneously determine unique product prices and cost allocations using the net realizable value method.

Date: 1985
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