Joint Product Cost

Joint Product Cost

In accounting, the cost of two or more products derived from the same source. For example, natural gas and oil from the same well share joint product costs. Because it is impossible to distinguish which product caused a particular cost, joint product costs are distributed according to the expected sale price of each product.
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First, we have assigned the joint product cost of $3,575 to Alpha (see above supporting discussion).
GAAP requires full-absorption costing, so manufacturers must somehow assign joint product cost (if any) to the final products.

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