Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Physical measure method of allocating joint costs

05/12/2021 Client: muhammad11 Deadline: 2 Day

The three methods used to allocate joint cost are Physical Measures of Output, Relative Sales Value, and Net Realizable value. Physical measures of output reflect some quantifiable physical characteristics of the joint products (Schneider, 2012). Physical Measures of Output method has two potential disadvantages. One disadvantage is having the possibility of having different units of measure. A second limitation is that physical measures may be unrelated to the profitability of the joint products (Schneider, 2012). The advantage of using this method is that it gives flexibility. The physical-measure method is often used when "output prices are highly volatile or unpredictable, significant processing occurs between the split-off point and the first sales opportunity, or the market does not set product prices" (Hilton et al, 2003).

The relative sales value (RSV) approach allocates joint costs in proportion to the joint products' total sales values at the split-off point. (Schneider, 2012). A potential problem with the RSV approach is that sales prices at the split-off point may not be readily available (Schneider, 2012). Even after one of the products may be complete after the split-off, the availability to sell the product may not exist at the present time. This will cause profits to be delayed until the product has been developed into something useful.

The net realizable value (NRV) method uses approximations of sales values at the split-off point. NRV is the total sales revenue of the product in its final form less any separable costs (Schenider,2012). This is the process that I would recommend because it is as close as you can get to actual value when estimating profits and/or losses. The NRV method "allocates joint costs to joint products on the basis of relative NRV - final sales value minus separable costs - of total production of the joint products during the accounting period" (Horngren et al, 2006, p. 572).

2.

· Physical Measures of Output allocate costs of products that have some measurable physical components of the joint product (Schneider, 2012). One advantage to physical measures of output is that it is fairly simple to use; however outputs may have different units of measure (Schneider). An example provided in our text was that of petroleum that produces gasoline, a liquid measured by gallons, and paraffin, a solid measured by pounds (Schneider).

· Relative Sales Value (RSV), allocates joint costs as they relate to the joint products’ total sales value at the split-off point (Schneider, 2012, 8.1). A disadvantage with this method is that at the split-off point sales prices may not be available or the product may not even have a market (Schneider).

· Net Realizable Value (NRV), uses total sales revenue minus any separable costs, such as processing costs, selling costs, and disposal costs (Schneider, 2012). At times there are products with a NRV that is negative, when this occurs allocation costs should not be applied to that product (Schneider).

Although the first two methods seem relatively simple to use, I would recommend the NRV method. This method can be approximated by using total revenues minus the separable costs (Schneider, 2012). Plus, NRV also gives you the additional advantage of estimating the byproduct and scrap value of the main product (Schneider).

3.

Variable costing (also known as direct costing) is an approach to product costing that assigns only variable manufacturing costs (direct materials, direct labor, and variable factory overhead) to items produced (Schneider, 2012). Absorption costing (also known as full costing), the method typically used for external income statement reporting, allocates all manufacturing costs (variable and fixed) to products (Schneider, 2012).

After reviewing each costing methods I chose to explore the Absorption Costing method. I am in favor of using this method instead of the variable costing method. My decision was not based on which method would lead to larger profits. Deciding between variable costing and absorption costing has an impact on inventory values and profits because of the variation in the treatment of fixed factory overhead. Although the profit can differ between the two costing methods, profit under variable costing is not always higher or lower than absorption costing (Schneider,2012). Companies have to prepare financial statements each year. The absorption costing methods already allocates the cost as needed to prepare the statements. Another benefit to using this method is that you are not dealing with variables that change each quarter or year. By absorbing all of the cost, you eliminate the hassle of trying allocate cost to the correct overhead for unexpected expenses. Each cost has its benefits and disadvantages. I think that the type of organization you have and the product you produce should be the determining factor on which method you choose.

4.

The costing approach I selected was that of absorption costing. My first reasoning is based on the argument for the long-term value of absorption costing, mangers may prefer short-term due to their focus on short-term situations, which is more conducive with variable costing, however eventually a company’s main focus should be that of a long-term (Schneider, 2012). My second reasoning is based on the additional argument that even though with the absorption costing some mistakes may be made in the short-term, the situation will eventually correct itself in the long-term. Also, the argument of an unethical manager could be discovered with a skilled supervisor (Schneider).

Finally, I believe the most important reason for the absorption costing approach is that it is required by the Internal Revenue Service (Schneider, 2012). If a manager using the variable costing approach internally, then switches to the absorption costing approach for the external requirements (IRS), this could cause unnecessary confusion, not to mention that it may have the appearance of some type of unethical behavior, such as hiding something (Schneider).

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Helping Engineer
Isabella K.
Instant Homework Helper
Top Grade Tutor
Smart Tutor
Financial Analyst
Writer Writer Name Offer Chat
Helping Engineer

ONLINE

Helping Engineer

I am a PhD writer with 10 years of experience. I will be delivering high-quality, plagiarism-free work to you in the minimum amount of time. Waiting for your message.

$17 Chat With Writer
Isabella K.

ONLINE

Isabella K.

I have written research reports, assignments, thesis, research proposals, and dissertations for different level students and on different subjects.

$48 Chat With Writer
Instant Homework Helper

ONLINE

Instant Homework Helper

I will be delighted to work on your project. As an experienced writer, I can provide you top quality, well researched, concise and error-free work within your provided deadline at very reasonable prices.

$28 Chat With Writer
Top Grade Tutor

ONLINE

Top Grade Tutor

I have done dissertations, thesis, reports related to these topics, and I cover all the CHAPTERS accordingly and provide proper updates on the project.

$16 Chat With Writer
Smart Tutor

ONLINE

Smart Tutor

After reading your project details, I feel myself as the best option for you to fulfill this project with 100 percent perfection.

$22 Chat With Writer
Financial Analyst

ONLINE

Financial Analyst

I find your project quite stimulating and related to my profession. I can surely contribute you with your project.

$35 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

The most common circumstance for project closure is simply a - The vehicle electrical system consists primarily of - Budgeted Expectations! - Rusty holden ute song - Heinemann physics 11 vce sb eb 4e - W3Accounting - A.1 Global health - Zipcar is an example of what type of market orientation - Additivity of heats of reaction hess's law lab answer key - Covidien pulse oximeter manual - Abou ben adhem poem wikipedia - Lunar eclipse diagram labeled - Microeconomics assignment, 750 words, due date 31 October - How are the roles of men and women portrayed in the short story “The Story of an Hour” by Kate Chopin?? Are they distinctly different? Do they have equal rights? What gender expectations do they follow or fight against? whats Chopin comment - Practical management science excel files - Roseto mystery outliers - Foundations of Business management assignment - Bah humbug glad to be a chimney sweep - Tales from dimwood forest - H101 - Auxochrome in uv spectroscopy - Elements of dynamic optimization chiang pdf - Select an organization that has leveraged Cloud Computing technologies in an attempt to improve profitability or to give them a competitive advantage. - What money market instrument is used to finance international trade - Where are fire extinguishers located - Crime analysis - Got lactase blood glucose data analysis - Spiky cactus clash of clans - When i heard the learn d astronomer questions and answers - First order linear differential equation with variable coefficients - Ethics in Psychology - Eugene teo net worth - Https www touchdevelop com app - The break even point can be expressed as sales in - The party line rachel rafelman - 200 words - Www eastanglianairambulance org uk - Finance 370 - BBC Documentary "Billion Dollar Day" - Understanding black american aspects in hip hop cinema - Lab 2 separation of a mixture chemistry 1 answers - Joe montoya senior center flagstaff - Marketing plan - How do kangaroos maintain homeostasis - Tenable remediation summary - A.1 risk management - Counter Terrorism - Vcaa 2017 eal exam - Sentences paragraphs and beyond 7th edition answers - Examples of professional growth plans for speech-language pathologists - Are you experienced novel - Bega valley private hospital - The ugly duckling lesson - Barriers to change - Literary analysis outline - Sustainbility Essay - Capstone Project Change Proposal Presentation for Faculty Review and Feedback (Fall prevention strategies in hospitals.) - Rmc inc is a small firm that produces - Graph for sin x cos y - Accessibility checker word 2011 mac - Communities and biomes virtual lab answers - Wolfson college oxford accommodation - Com 201 - Big Data Analytics in organisation - Police scanner codes list victoria - Norton give me liberty ebook - Diabetes type 2 - 2400 word paper on Organizational Change in a Fortune 1,000 company - I have hereunto set my hand meaning - Thermodynamics enthalpy of reaction and hess's law post lab answers - Merbein common boat ramp - 4360 risk management standard - Discussion 09.1: Correlation and Regression - Journal entry for acquisition - Is someone able to complete my Contemporary International Problems essay? - Discussion Post - Meadowside family health centre - Smell and taste homework answers - Discussion - For prof avril - Discussion Question - Frances glessner lee nutshell answers - Ernest jones hamlet and oedipus - Threat Modeling - Internal conflict in the story of an hour - Ex turpi causa rta - Food Label Assignment - George j & jones g understanding and managing organizational behavior - Strategic management - Atomic emission spectra lab answer key - Sba sample english - Structure and profile of residential aged care sector - Jean dominique bauby disability - Bourke high school staff - Is technology making us dumber synthesis essay - What does opposite mean in math - Give me liberty access code - Wickes latte oak laminate flooring - How many people did corrie ten boom save - 3 year old shoe size australia - Three signs of a miserable job pdf