Page 28 - Cost Accounting - Ready Reckoner

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Joint cost (cost incurred until split off) is apportioned to Joint Products and By
Products by any of the following methods.

1. Physical Units Methods: Based on Quantity.

2. Reverse Cost Method:

We all know, Cost + Profit = Sales. If we arrive at cost, in the reverse working,
(i.e) Sales – Profit = Cost, it is reverse cost method.

Particulars Amount (₹)
Sales xxxx
Less: Profit xxx
Total Cost xxxx
Less: Further Processing Cost xxx
Share of Joint Cost xxxx

3. Net Realisable Value Method (NRV):

The most commonly used method for allocating Joint cost among Joint Products
and By products is NRV Method. NRV is arrived as:

Particulars Amount (₹)
Sales Value after further processing xxxx
Less: Further processing cost xxx
NRV xxxx