Describe the three methods used to allocate joint costs. What are the advantages/disadvantages of each allocation method? Which method would you recommend? Why? Support your position with evidence from the text or external sources. Your initial post should be 200-250 words.
The text explains the three methods used to allocate joint costs are physical measures of output, relative sales value, and net realizable value. The specified products irrefutable physical characteristics refer to the first method discussed. Some examples are number of units, weight, and liquid volume. Basically, tangible and provable characteristics that you can see or feel. The reason this method is advantageous is how simple you can submit into utilization. Many products out there have various versions that you can chose that slightly differ such as vehicles. Many vehicles even with in the same make and model have different classes such as, SE, SLE, an LE. All three cars look the same until they add the features of each.
The net realizable value method uses percentages at the split-off point. This helps the organization to control expenses. Typically, you need a large amount of sales or volume before you can actually split it. The main issue arises when the product comes back negative. The mean the cost did not have anything to do with the product.
The last method and the one that seems to be best is the relative sale value method. This has the most flexibility and seems to for see ad forecast.
Reference:
Schneider, A. (2012). Managerial Accounting: Decision Making for the Service and Manufacturing Sectors. San Diego: Bridgepoint Education
As you read in Chapter 8, there are arguments (for and against) variable costing and absorption costing. Select one of these costing methods and explore the various arguments. Determine whether you are “for” or “against” this selected method. Provide evidence from the text to support your position. Your initial post should...