tailieunhanh - Inventory accounting a comprehensive guide phần 7

Mở rộng ở cuối của năm Chi phí / Mỗi $ 34,50 36,00 37,50 mở rộng tại tất cả của năm Giá $ - Năm 1 2 3 4 Kết thúc Đơn vị Số lượng Từ khi bắt đầu của năm Chi phí / mỗi $ - 32,00 34,50 36,00 Cuối năm Giá $ | Joint and By-Product Costing I 143 Because there are accounting and legal reasons for doing so. Generally accepted accounting principles GAAP require that costs be assigned to products for inventory valuation purposes. Although the costs incurred by a production process up to the split-off point cannot be clearly assigned to a single product it is still necessary to find some reasonable allocation method for doing so in order to obey the accounting rules. Otherwise all costs incurred up to the split-off point could reasonably be charged off directly to the cost of goods sold as an overhead cost which would result in enormous overhead costs and few direct costs only those incurred after the split-off point . The logic used for allocating costs to joint products and by-products has less to do with some scientifically derived allocation method and more with finding a quick and easy way to allocate costs that is reasonably defensible as we will see in the next section . The reason for using simple methodologies is that the promulgators of GAAP realize there is no real management use for allocated joint costs they cannot be used for determining break-even points setting optimal prices or figuring out the exact profitability of individual products. Instead they are used for any of the following purposes which are more administrative in nature Inventory valuation. It is possible to manipulate inventory levels and therefore the reported level of income by shifting joint cost allocations toward those products that are stored in inventory. This practice is obviously discouraged because it results in changes to income that have no relationship to operating conditions. Nonetheless one should be on the lookout for the deliberate use of allocation methods that will alter the valuation of inventory. Income reporting. Many organizations split their income statements into sublevels that report on profits by product line or even individual product. If so joint costs may make up such