Joint costs are used to compute total product costs or the purpose of determine a profit and a sale price. You need to calculate joint costs to calculate inventoriable costs and cost of goods sold. However, as noted in the journal of accounting, not-for-profit entities (NFPs) are under constant pressure to devote an increasing portion of their expenditures to accomplishing their mission programs (disaster relief). However, money must be spent on administration (rent or leasing fees, utilities, etc) , management functions (salaries, travel, blood donations, etc) and fundraising efforts. Pretend that you were donating funds to the Red Cross , propose ways that Red Cross should allocate funds donated from the general public. Also discuss the consequences, if donors or contributors restrict their donations to only disaster relief.

Answer rating: 100% (QA)

There is no specific proposal guideline that must be adopted by NFPs for allocation of joint costs but it is important that the allocation should be i... View the full answer