Joint costs (also known as common or pre-separation costs) are costs common to the production process during which are simultaneously processed two or more different products. These costs can be assigned to the individual products by using a specific costing methods (see below).
These are the costs incurred before so called split-off point (point of separation). It is a point up to which joint processes are carried out and after which joint or by-products become separately identifiable and can be either sold or further separately processed.
Costs incurred after the split-off point (so called post-separation costs) can be easily identified with individual products, but joint costs need to be apportioned.
There are two general approaches depending on the type of products: