JOINT PRODUCT DECISIONS

When a manufacturing Company carries out a process operation in which 2 or more joint products are made from a common process a number of decision troubles can occur. These are:

(1) If the joint product can be sold at existing condition at the split-off point or after further separate processing, then a decision should be made on whether to process further.

(2) If extra demand for a joint product exists and not others then it is necessary to know whether it is worth making more output of the joint product so as to make a profit on one and dispose off the other.

(3) If it is possible to change the input so as to change the product mix, then product mix decisions should be made.

Joint Product further processing decisions:

In these decisions the relevant costs are the additional costs of further processing, which should be compared with the incremental revenue of further dealing out. The joint costs acquired before the split-off points are irreverent.