Explore BrainMass

Explore BrainMass

    Joint Cost, Called Physical Output and Net Realizable Value

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What are the pros and cons of the joint cost allocating method, called physical output method, and net realizable value method?

    Describe what industries would use either job costing or process costing and explain why.

    © BrainMass Inc. brainmass.com October 2, 2020, 1:50 am ad1c9bdddf
    https://brainmass.com/business/direct-write-off-method/joint-cost-called-physical-output-net-realizable-value-405530

    Solution Preview

    DEAR STUDENT,

    What are the pros and cons of joint cost allocation method called physical output method and net realizable value method?
    Joint costs are those costs incurred by the company for producing two or more products simultaneously from the same production process and these products are not separable till the production process reaches the particular point. These costs need to be allocated to the joint products on some rational basis. Physical units method and net realizable value method are the methods for allocating the joint costs to the joint products.

    Physical units method:
    Under this method the joint costs are allocated on the basis of physical measure of the products. Examples of physical measures are pounds, kilograms, liters, etc. Take the following example.
    Three products A, B and C are joint products manufactured simultaneously from the single process and the joint costs for these three products are $150,000. The number of units produced is:
    A 10000
    B 20000
    C 20000
    TOTAL UNITS 50000
    Therefore, the joint costs under physical units method are allocated as follows:
    A ...

    Solution Summary

    This solution provides a detailed comparison of joint cost, called physical output and net realizable value methods.

    $2.19

    ADVERTISEMENT