What are the joint products and knowing the its costs distribution

What are the joint products? First of all, let us agree that your role as a professional cost accountant in the company allows you to know every small and large thing about the activity of your company, simply because you have analyses each amount spent on any activity you have done. Where did he come from, where he went, and where he was supposed to go basically

Your role as an accountant costs that you look at the world from above!

Meaning, your job is not limited to closing a budget or making an audit balance and adjusting matters with taxes

This is one thing, and your work is in the company's operations room and the cost analysis that you do and submit to management ,  is definitely another thing.

Let's talk about an important topic of costs, and as a cost accountant, you are supposed to be conscious of it and know it from A to Z

What does it mean joint products?

These joint common products are a group of products of the company or factory that produces them through one production process and using the same raw materials. We understand one and one. We find that in the field of petroleum, the company is in order to extract gasoline in its grades, diesel and oils. And look for crude oil and start separating it for its derivatives

All the money that we pay to experts and workers, renting machinery and equipment, eating and drinking in order to finally reach the point of oil extraction, and we call it the joint costs incurred in order to produce a group of joint products for some, and when we reach oil here we are at a point we call it the split-off point

 And then I can separate the gasoline from the diesel from the gas from the oils, in other words, we extract the joint products

Knowing the distribution of joint costs

Take into account that every pound is paid after the separation point

 I can identify any product I have paid for and therefore I can associate it with it

But the question here is: How do I allocate the joint costs that I incurred before the point of separation on the products I ordered and on what basis?

We find here that there is more than one way through which I distribute these costs among the products, as we will see

There is an opinion: to see each price of each product it produced in the market and distribute the joint costs on the basis of this selling value, meaning if a barrel of oil costs $ 100, gasoline is 200 and diesel is $ 50, and the costs incurred by it until the point of disconnection have reached $ 1,000,000, the one million dollars distributed in this way.

Oils of joint costs quota = 1,000,000 * (100 ÷ 350) = $ 285,715

The of gasoline quota = 1,000,000 * (200 ÷ 350) = $ 571,428

Solar quota = 1,000,000 * (50 ÷ 350) = $ 14,285.7

She then determined that each product cost me how much of the combined costs I paid

He promised to see each product that cost me after the point of separation, and put it on your hands the cost of the final product

I mean, for example, gasoline, with pure impurities, sold it in barrels, and shipped it and coupled to the customer, and all of that cost me $ 200,000 for gasoline only

Here I can say that the cost of gasoline is 571428 + 200,000 = 7714288 dollars. In this case, I There is also a second opinion: that the joint costs are to be distributed on the basis of the size of the units that have been produced by each product, regardless of the method by which it will be distributed. The most important thing is to understand what is meant by a joint product and joint costs and how they are distributed among the product and on the basis of which the selling price will be determined.

The quote for the best accounting software in Egypt and the Middle East can be requested from the Accflex system immediately.