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Akuntansi Biaya - Mercu Buana University Sim+... · PDF fileAkuntansi Biaya Costing By-Products and Joint Products Ekonomi dan Suryadharma Sim, SE, M. Ak Bisnis S1 Manajemen .

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Akuntansi Biaya Costing By-Products and Joint Products

Suryadharma Sim, SE, M. Ak

09 Ekonomi dan

Bisnis

S1 Manajemen

Costing By-Products and Joint Products

By-Products and Joint Products Defined

The term by-product is generally used to denote a product of relatively small total value

produced simultaneously with a product of greater total value.

Joint products are produced simultaneously by a common process or series of processes,

with each product possessing more than nominal value in the form in which it is produced.

Many industrial concerns are confronted with the difficult and often rather complicated

problem of assigning costs to their by-products and joint products. Chemical companies,

coke manufacturers, refineries, flour mills, coal mines, lumber mills, gas companies,

dairies, canners, meat packers, and many others produce in their manufacturing or

conversion processes a multitude of products to which some cost must be assigned.

Assignment of costs of these various products enhances equitable inventory costing for

income determination and financial statement purposes. An even more important aspect of

by product and joint product costing is that it furnishes management with data for use in

planning maximum profit potentials and evaluating actual profit performance.

Costing By-Products and Joint Products

Difficulties / Problems in Costing by Products and Joint Products:

By products and joint products are difficult to cost because a true joint cost is

indivisible. For example, an ore might contain both lead and Zink. In the raw

state, these minerals are joint products, and until they are separated by

reduction of the ore, the cost of finding mining, and processing is a joint cost;

neither lead nor Zink can be produced without the other prior to the split-off

point.

The cost accumulated to the split-off point must be born by the difference

between the selling price and the cost to complete and sale each mineral after

the split-off point.

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Costing By-Products and Joint Products

Joint Products and Joint Product Cost:

Definition and Explanation of Joint Products:

Joint products are produced simultaneously by a common process or

series of processes, with each product processing more than a

nominal value in the form in which it is produced. The definition

emphasizes the point that the manufacturing process creates

products in a definite quantitative relationship. An increase in one

product's output will bring about an increase in the quantity of the

other products, or vice versa, but not necessarily in the same

proportion.

Costing By-Products and Joint Products

Definition and explanation of Joint Product Cost:

A joint product cost cay be defined as that cost which arises from the common processing or

manufacturing of products produced from a common raw material. Whenever two or more

different products are created from a single cost factor, a joint product cost results. A joint cost

is incurred prior to the point at which separately identifiable products emerge from the same

process.

Example:

For example, the production of coke, for which coal is the original raw material. In addition to

coke as its major product, the process produces sulfate of ammonia, light oil, crude tar and

gas. The greater quantity of gas is not sold but is used to fire the coke ovens and the boilers

in the power plant. The coke ovens are the split-off point for cost assignments. The cost of

each product consists of a pro rata share of the joint cost plus any separable or subsequent

costs incurred in order to put the products into saleable condition.

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Costing By-Products and Joint Products

COKE AND ITS ASSOCIATED PRODUCTS

COAL (ORIGINAL RAW MATERIAL)

COKE OVEN (SPLIT-OFF POINT)

COKE (MAJOR PRODUCT)

Plus Separable cost

COKE

SULFATE OF AMMONIA

Plus Separable cost

SULFATE OF AMMONIA

LIGHT OIL Plus Separable cost

BENZOL

CRUDE TAR Plus Separable cost

TAR

COKE OVEN GAS Plus Separable cost

GAS

Costing By-Products and Joint Products

Characteristics of Joint Products and Joint Cost:

Many products or services are linked together by physical relationships which

necessitate simultaneous production. To the point of split-off or to the point

where these several products emerge as individual units, the cost of the

products forms a homogeneous whole.

The classic example of joint products is found in the meat packing industry,

where various cuts of meet and numerous by products are processed from one

original carcass with one lump-sum cost. An other example of joint products

manufacturing is the production of gasoline, where the derivation of gasoline

inevitably results in the production of such items as naphtha, kerosene, and

distillate fuel oils.

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Costing By-Products and Joint Products

Other examples of joint products manufacturing are the simultaneous

production of various grads of glue and the processing of soybeans into oil and

meal. Joint product costing is also found in industries that must grade raw

materials before it is processed. Tobacco manufacturers (except in cases

where graded tobacco is purchased) and virtually all fruit and vegetables

canners face the problem of grading. In fact, such manufacturers have a dual

problem of joint cost allocation:

1. Materials cost is applicable to all grades

2. Subsequent manufacturing costs are incurred simultaneously for all the

different grads.

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Costing By-Products and Joint Products

By-Products:

Definition and Explanation of By Products:

The term "by product" is generally used to denote one or more products of

relatively small total value that are produced simultaneously with a product of

greater total value. The product with the greater value, commonly called the

"main product", is usually produced in greater quantities than the by products.

Ordinarily, the manufacturer has only limited control ov