Costing Nad Pricing Decisions

Running head: COSTING AND PRICING DECISIONS Costing and determine Decisions Cost Allocations Cost apportioning is the process of assigning the validating cost of producing a product. These indirect costs may be shared by multiple products. This is where cost allocation develops into play. substantiating costs can be allocated to products, services and de branchments. Cost allocation allows a company to calculate extensivey cost of their products. This provides them the capacity to price products accurately. Three common costs that need to be considered when allocating costs include phrase costs, sunk costs and prospect costs (Jiambalvo, 2007). Joint Costs When at least two products come out of a common input signal they are considered joint products. Joint costs are the costs of the common input that is put into the joint products. An example of joint products would be the miscellaneous types of fuels that are made from crude oil (Jiambalvo, 2007). Joint costs are commonly found in extractive, agricultural and chemical industries. They are also found in industries where different types or grades of the same product are made. It is very vital that the carcass used to cost the products incorporates the consumption of resources by product.

If this is not do properly costs will be unclear and dead products are likely to be produced (Tunes, Nyrud & Eikens, 2008). Horngren et al., 2006 wrote about quaternion methods used for the allocation of joint costs. These Four methods are gross revenue take account at split take point, physical measurement, discharge realizable value (NRV) and constant gross margin component NRV. In sales value at split-off point the coitus amount of cost and the congener amount of sales value are the same. In physical measurement the physical part of the product that is relevant at the point of split off what will be the cost allocation key. When using NRV calculate the costs that are directly connected to that product relative to the total NRV from the final sales... If you want to get a full essay, order it on our website: Orderessay

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