Chapter 16, Problem 16.1Q

Give two examples of industries in which joint costs are found. For each example, what are the individual products at the splitoff point?

To determine

Joint Cost:

Joint cost is a cost accounting term, which is referred to common costs incurred in purchasing or in the process of producing multiple products.

Split-off Point:

Split-off point is the point in production process where joint products are capable of being distinguished individually.

To identify: Examples of industries in which joint costs are found.

Answer to Problem 16.1Q

Given below are the examples of industries where joint costs are found:

• Dairy Food Industry – Products are milk, cream, butter, cheese yogurt, whey and milk powder
• Sugar industries – Products are sugar, brown sugar, bagasse and molasses, rum and filter cake.

Explanation of Solution

• Joint costs are incurred in combination and therefore it is difficult to identify the cost of individual products.
• Whereas after split-off point it is easy to identify the costs of products individually.

Conclusion

Hence, dairy food industry and sugar industry are one of the industries where joint costs are found.