Joint Costs

In accounting, cost of two or more products that arise from the same manufacturing process, as when silver and gold are taken from the same mine. It is impossible to distinguish the cost of mining each, so costs are generally allocated based on the relative selling price of each product. See also By-Product.

Common manufacturing costs incurred prior to the point, referred to as the Split-Off Point, where Joint Products are identified as individual products. There are several methods of allocating joint costs to the joint products, including sales value and volume. See also Common Cost; Sell-Or-Process-Further Decision.