Method of allocating Joint cost :-
01.Market or sale value method include the following two methods are
A. Ultimate market value method (Where no consider further processing cost)
B. Hypothetical Market value or Net realized value (NRV) Method.(Where consider further processing cost)
02.The quantitative or physical unit Method like,
A. Weight (Say kg)
B. Quantity(say physical unit)
C. Volume(say cubic feet)
03.Average unit of cost Method:-
04.Weighted Average Method:-
05.Constraint Gross margin % on cost allocation method:-
**Accounting treatment of by product sale:-**
There are two method for Accounting by product . like,
01.Production method
(Under this method sales value of by product must deduct from manufacturing cost of main product, Where closing stock are not considerable that means total production*selling price is the market value .)
02.sales method
Under this method sales value may be grouped either ,
A. Other sales
B. Other income or
C. Deducted from the cost of goods sold