Accounting Assignment Help With By-Product Costing

7.4 By-product costing

Practically speaking by-products are not costed. They are of insignificant value as compared to the main product(s). Value of by-products is deducted from the joint cost to arrive at the cost of main products.

Let us see the product costing structure

Accounting Assignment Help Order Now

joint products cost

Input 20,000

Units

By product costing

Total cost $ 100,000

Less: By product value $ 4,000

Cost of main product $96,000


Cost per unit of main product is $ 6.

Sometimes by-products are also processed further. In that situation Reverse cost method is followed for by-product costing. This method suggests deducting separate cost, selling and distribution cost and reasonable profit to arrive at the cost of by-product at the time of split off point.

Continuing with the example given above, let us suppose B is sold for 16,000, separation processing cost is $ 8,000 and per unit packaging cost is $ 3. A profit of 10% is expected on cost. Applying reverse cost method, cost of by-product may be arrived at as follows.

Sales $ 16,000

Separate process cost $ 8,000

Selling cost $ 3,000

$ 11,000

Profit $ 1,100 $ 12,100

Cost of by-product B at $ 3,900

Split off point

So, the joint cost is apportioned between M and B as follows.

reverse cost method

Email Based Assignment Help in By-Product Costing

To Schedule a Accounting By-Product Costing tutoring session click here

Following are some of the topics in Process Cost Analysis in which we provide help:

Accounting Assignment Help | Accounting Homework help | Help with Accounting | Management Accounting | Accounting Homework Help | Accounting Assignment help | Cost Accounting | Online Tutoring | Financial Accounting | Email Based Accounting Homework Help