Joint Costs Allocation using the Physical Units Method (Managerial Accounting Series)
In this managerial accounting presentation I discuss how we will allocate joint costs using the physical units method. We will prorate the joint costs to the separate joint products for the purpose of valuing our inventory and determining income from each product. We need a method that allocates costs so that each product has a fair allocation of cost and yields a profit. In this case, the physical units method does not seem to yield a profit for both products, which we require.
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