Define the average cost allocation methods using Average Cost Method Maintenance (15.12.5). The system provides three methods for allocating costs from a joint order set to co-products:

If other methods are needed, users can provide their own programs. If no method is specified for a site, the Receipt Quantity method is used.

Allocation of base process costs to co-products is based on the cost of a standard batch size. All allocation percentages are calculated using equivalent units of measure based on the unit of measure for the base process. Where co-product units of measure differ from the unit of measure for the base process, the system employs conversion factors in order to express all costs in the base process unit of measure.

The percentage of cost to allocate to a co-product is determined by its price, relative to the prices for the other co-products from a base process. Co-product Costs Allocated by Price shows how costs are allocated by price.

The percentage of cost allocated to a co-product is determined by the total quantity produced (plus reject) for the co-product, relative to the receipt (plus reject) quantities for other co-products of the base process. Co-product Costs Allocated by Receipt Quantity shows how costs are allocated by receipt quantity.

The percentage of cost allocated to a co-product is determined by the extended price of the total quantity received plus reject for that co‑product, relative to the prices and receipt plus reject quantities for the other co-products from a base process. All quantities are converted to the base process unit of measure.