Abstract
Use of the net realizable value approach for joint manufacturing cost allocations requires knowledge of selling prices of joint products. However, joint product selling prices themselves are functions of the allocated costs under a cost-plus pricing policy. In this case, it is necessary to determine joint cost allocations and joint product prices simultaneously. This paper applies a nonlinear programming (NLP) approach to simultaneously determine the optimal joint production decision, joint product cost-plus prices, and joint cost allocations using the net realizable value method. The NLP solution provides not only the optimal joint production and pricing decisions, but also the necessary conditions for such optimal decisions.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
