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Cost Allocation Methods for Joint Products and By-products

Author

Listed:
  • Stoyan Deevski

    (University of National and World Economy, Sofia, Bulgaria)

Abstract

The purpose of this paper is to look into the problems of costing of joint products and by-products in industrial organizations. The paper starts with an introduction to the problem of allocating joint costs (common costs up to the split-off stage) to products. The author defines the basic terms of joint products, by-products, common and joint costs and analyses how the problems of costing can be approached. Two approaches are discussed for joint products cost allocation and two approaches for by-products cost allocation. The author presents adapted methods for costing within those approaches and discusses the situations in which those will be most appropriate to apply. The paper concludes with a note on the importance of using proper methods for cost allocation of joint products and by-products as part of the broader management process of ensuring long-term profitability of the industrial organizations

Suggested Citation

  • Stoyan Deevski, 2016. "Cost Allocation Methods for Joint Products and By-products," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 1, pages 64-70, March.
    • Handle: RePEc:nwe:eajour:y:2016:i:1:p:64-70
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    File URL: http://www.unwe.bg/uploads/Alternatives/deevski_br1_2016-6.pdf
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    Citations

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    Cited by:

    1. Julia Wenger & Stefan Pichler & Annukka Näyhä & Tobias Stern, 2022. "Practitioners’ Perceptions of Co-Product Allocation Methods in Biorefinery Development—A Case Study of the Austrian Pulp and Paper Industry," Sustainability, MDPI, vol. 14(5), pages 1-16, February.
    2. Shastitko, Andrey Ye. (Шаститко, Андрей) & Pavlova, Natalia S. (Павлова, Наталья), 2019. "Complex Services: Product Market Definition in Mobile Communications [Услуги В Комплексе: Определение Продуктовых Границ Рынка В Мобильной Связи]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 4, pages 120-141, August.

    More about this item

    Keywords

    cost allocation; joint products; by-products;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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