Weighted Average Method--Allocating Joint Product Cost:

Learning Objectives:

1. Explain the procedure of allocating joint product cost when weighted average method is used.

many industries, the previously described methods do not give a satisfactory answer to the joint cost apportionment problem. For this reason, weight factors are often assigned to each unit, based upon size of the unit, difficulty of manufacture, time consumed in making the unit, difference in type of labor employed, amount of materials used etc. Finished production of every kind is multiplied by weight factors to apportion to total joint cost to individual units.

Using figures from the average unit cost method page, weight factors assigned to the four products might be as follows:

Example:

The joint production cost allocation would result in these values:

You may also be interested in other relevant articles:

• Difficulties in costing by products and joint products
• Joint Products and Joint Product Costs
• By Products
• Recognition of Gross Revenue
• Recognition of Net Revenue
• Replacement cost method
• Market value method or reversal cost method
• Characteristics of Joint Products and Cost
• The market or sales value method, based on the relative market values of the individual products
• The quantitative or physical unit method, based on some physical measurement unit such as weight, linear measure, or volume
• The average unit cost method
• Joint Product Cost Analysis For Managerial Decisions and Profitability Analysis

 

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