Cost Accounting – 12^th Edition

Ch 16 Terms

Byproducts – Products from a joint production process that have low sales values compared with the sales value of the main product or joint products.

Constant gross margin percentage NRV method – Method that allocates joint costs to joint products in such a way that the overall gross-margin percentage is identical for the individual products.

Joint cost – Costs of production process that yields multiple products simultaneously.

Joint products–Two or more products that have high sales values compared with the sales values of other products yielded by a joint production process.

Main product – Product from a joint production process that has a high sales value compared with the sales values of all other products of the joint production process.

Net realizable value (NRV) method – Method that allocates joint costs to joint products on the basis of the final sales value minus the separable costs of the total production of the joint products during the accounting period.

Physical-measure method – Method that allocates joint costs to joint products on the basis of the relative weight, volume, or other physical measure at the splitoff point of the total production of these products during the accounting period.

Product – Any output that has a positive sales value ( or an output that enables an organization to avoid incurring costs).

Sales value at splitoff method- Method that allocates joint costs to joint products on the basis of the relative total sales value at the splitoff point of the total production of these products during the accounting period.

Separable costs– All costs (manufacturing, marketing, distribution, and so on) incurred beyond the splitoff point that are assignable to each of the specific products identified at the splitoff point.

Splitoff point –The juncture in a joint-production process when two or more products become separately identifiable.