NEED ANSWER ASAP ANSWER THROUGHLY COPY AND PASTE ANSWER NOT ATTACHMENT Allocatin
ID: 2543133 • Letter: N
Question
NEED ANSWER ASAP
ANSWER THROUGHLY
COPY AND PASTE ANSWER NOT ATTACHMENT
Allocating joint costs and costs of byproducts allows managers to examine cost and profitability associated with each of the products they produce enabling them to establish goals related to product-mix. Your discussion topic this week focuses on joint costs and byproducts. Please respond to all of the following prompts:
1.Give two examples of industries in which joint costs are found. For each example, what are the individual products at the split-off point?
2.Why might managers seeking a monthly bonus based on attaining a target operating income prefer the sales method of accounting for byproducts rather than the production method?
Explanation / Answer
1. Two industries where joint costs can be found are agriculture industry and petroleum industry. In an oil refinery crude oil after refining can be split off in auto gasoline and kerosene. In an animal farm cost of feeding both sheep and cattle is a joint cost but both goat and cattle are used for different purpose after split off point.
2. Sale method of accounting for by products is helpful for managers to manipulate timing of sales of by product in order to affect operating income. A manager who is unable to achieve his target operating income can sale by products at very low cost in order to improve operating income. This facility is not available with production method.
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