Joint Costs Allocation using the Relative Sales Value Method (Managerial Accounting Series)
In this managerial accounting presentation I discuss how we will allocate joint costs using the relative sales value method. We will prorate the joint costs to the separate joint products (chemical A and B) 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, there is income from each chemical (joint product) which is why the sales value method may be a good choice to use for allocating joint cost.
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