The Relative Sales Value method helps in allocating joint costs based on the prices at which products will be sold. It is basically the process calculating all costs of multiple products produced at the same time in the factory and further helps in analyzing and tracking the profit they will earn from the investment made. Copy the link given below and paste it in new browser window to get more information on Relative Sales Value:- http://www.transtutors.com/homework-help/accounting/inventories-valuation-using-relative-sales-value/

1. RELATIVE SALES VALUE

2. WHAT IS RELATIVE SALES VALUE
METHOD?
 The relative sales value
method is the process
calculating all costs of
multiple products produced
at the same time in the
factory and further helps in
analyzing and tracking the
profit.

3. ADVANTAGES OF USING RELATIVE
SALES VALUE METHOD
 Controls cost: This method
helps in allocating the actual
cost incurred in production
as owner also invest in
various assets like plant,
machinery, building, etc. for
starting a business.

4. ADVANTAGES OF USING RELATIVE
SALES VALUE METHOD
 Financial decision: After
allocating different costs for
different products to find the
profit margin of each product
allows the firm to make
decision in favor of that
product which has high
profit margins and high
sales volume.

5. ADVANTAGES OF USING RELATIVE
SALES VALUE METHOD
 Prepare proper accounts:
Relative sales value method
helps in preparing accounts
up to date as it considers all
the assets of the firm to
allocate costs and track profit
margins.

6. WHAT IS MEANT BY JOINT COST?
 Joint costs is the expense benefits to two or more products
but cannot be separated for different products in the
production process.

7.  Split-off point is the point at which production of two or
more products are separated after jointly produced till
some stage in the manufacturing process.
WHAT IS MEANT BY THE TERM SHPLIT-
OFF POINT?

8. 1. Find the joint-production costs
2. Calculate sales price and number of units of jointly
manufactured products.
3. Divide the total sales price of each product to the total
sales price.
4. Calculate the joint cost using relative sales values.
HOW DO YOU CALCULATE JOINT
COST USING RELATIVE SALES
VALUE METHOD?

9. EXAMPLE OF CALCULATING JOINT
COST OR VALUE OF SALES
 In this example, allocation of
joint costs is made and thus,
profits can be calculated
easily. Joint cost is divided
into 60% and 40% for cocoa
butter and cocoa powder
respectively. Profit of cocoa
butter is $90 (750-660) and
cocoa powder is $60 (500-
440).

10. WHAT IS BASKET PURCHASE?
 Basket Purchase means a
buyer buying number of
assets altogether in a single
transaction. It is the
opportunity for the buyer to
buy all those assets at a price
less than their combined
market values. It is also
known as lump-sum
purchase.

11. Hey Friend,
This was just a summary on Relative Sales Value. For more detailed
information on this topic, please type the link given below or copy it from
the description of this PPT and open it in a new browser window.
www.transtutors.com/homework-help/accounting/inventories-valuation-
using-relative-sales-value/