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In: Accounting

Compare the advantages and disadvantages of the two primary methods used to allocate joint cost to joint products.

Compare the advantages and disadvantages of the two primary methods used to allocate joint cost to joint products.

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Expert Solution

Approaches to allocating joint process costs are classified into two general categories: (1) physical measures and (2) monetary measures. Physical measures (e.g., tons, barrels, feet) are unchanging yardsticks; monetary measures change over time with inflation. However, monetary measures assign joint process costs to joint products proportionately to relative sales value. Physical measures treat each physical unit of output as equally desirable by assigning a uniform amount of joint process cost to every unit of output produced.

Physical measures (e.g., tons, barrels, feet) are unchanging yardsticks; monetary measures change over time with inflation.

Samantha Mae Cerdeño answered 2 years ago
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