Quantitative or Physical Unit Method--Allocating Joint Product Cost:
Learning Objectives:
- Explain quantitative or physical unit
method of joint cost allocation.
Quantitative or physical unit method
attempts to distribute the total
joint cost
on the basis of some unit of measurement, such as pounds, gallons, tons, or
board feet. Of course, the unit products must be measurable by the basic
measurement unit. If this isn't possible, the joint units must be converted
to a denominator common to all units produced, For example, in the
manufacture of coke, products such as coke, coal tar, benzol, sulfate of
ammonia, and gas are measured in different units. The yield of these
recovered units is measured on the basis of the quantity of product
extracted per ton of coal.
Example:
The example shows the use of weight as a
quantitative unit method of
joint cost
allocation:
|
Products |
Yield in Pounds of Recovered Product Per Ton Coal |
Distribution of Waste to Recovered Products |
Revised weight of Recovered Products |
Materials Cost of Each Product Per Ton of Coal |
| Coke |
1320.00lbs |
69.474* |
1389.474 |
$13.895** |
| Coal tar |
120.00 |
6.316 |
126.316 |
1.265 |
| Benzol |
21.90 |
1.153 |
23.053 |
0.230 |
| Sulfate of Ammonia |
26.00 |
1.368 |
27.368 |
0.275 |
| Gas |
412.10 |
21.689 |
433.789 |
4.335 |
| Waste (water) |
100.00 |
|
|
|
| |
------------- |
-------------- |
-------------- |
-------------- |
| Total |
2000.00 |
100.00 |
2000.000 |
$20.000 |
| |
======= |
======== |
======== |
======= |
*[1,320 ÷
(2,000 – 100)] = 69.0474
**(1,389.474 / 2,000 ) ×
$20 = $13.895 |
|
|
