Cost Acct Exam 3

joint products

primary outputs of a joint process; substantial revenue-generating ability. the process is the same to produce multiple products

examples of joint products?

crude oil as it yields multiple products like gasoline, kerosene, diesel, etc. another example is milk which can create butter, cream, cheese

by-products

incidental output of a joint process with a higher sales value than scrap but less than joint products

scrap

incidental output of a joint process with a low sales value

waste

residual output with little or no sales value

split-off point

when joint products are first identifiable as individual products, happens at the end of the joint process

what do joint costs become once the split-off point is reached?

sunk costs

what are sunk costs?

costs that already happened and have no role in future or current decisions

Joint costs may be reduced by…

the sales value of by-products and/or scrap

separate cost

incurred in later states of production; assignable to specific primary products

what is the difference between joint costs and separate costs?

joint costs happens before the split-off point and separate costs happen after the split-off point to process the joint products further

another term for joint product

primary product

incremental means?

the very next product that you buy or sell

what do you do if incremental revenue > incremental costs?

process primary products further

what do you do if incremental revenue < incremental costs?

sell primary product at split-off