The joints products cannot be identified as separate products up to a certain stage in manufacturing. This stage is known split-off point. The exact point in a manufacturing process where two or more products can be distinguished is defined as the split-off point.
The cost incurred up to the point of separation is called joint cost. likewise the cost incurred after the split off point is known as separate or subsequent cost .
C.I.M.A. terminology defines joint cost as "the cost of providing two or more products or services whose production could not, for physical reason , be segregated".
In the words of cost management ,joint cost are "Costs to operate joint processes, including the disposal of waste".
In short , joint cost means all costs incurred prior to the point of separation. Joint cost cannot be traced to the particular product. The appointment of joint cost to each of the joint product is the meaning accounting for joint product. The apportionment of joint cost is very important for finding out the total cost of each joint product .
There are various accounting method adopted for the apportionment of joint cost to each product . The following methods are generally used for this purpose:
(1) Unit Method:
Average Unit Cost Method.
Physical Unit Method.
(2) Sales Volume Method .
Market Value at Separation Point.
Market Value after Further Processing.
Reverse Cost Method.
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