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Hi,
Can you help explain why for sales value method we apportion the joint costs using the production units instead of the sales units?
For net realizable value method, will we use the production units as well instead of the sales units?
Thank you
Sorry for the delay in answering this question – for some reason I must have missed it when you first asked!
It is because we are trying to calculate the cost of producing the units. As an extreme, imagine that we didn’t sell any of the production this year – as a result they were all still in inventory and would be sold next year.
Just because we didn’t sell them this year does not mean that they cost any less to make 🙂The same applies to the NRV method.
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