Teaching Case: The Allocation of Joint Costs in Processes with Multiple Splitoff Points at Refinaria Fluminense S.A.

Authors

  • Raphael da Fonseca Universidade Federal do Rio de Janeiro (FACC/UFRJ)
  • Moacir Sancovschi Universidade Federal do Rio de Janeiro (FACC/UFRJ)

DOI:

https://doi.org/10.17524/repec.v11i2.1536

Keywords:

Joint production processes, Joint cost allocation, Multiple splitoff points, Oil refineries

Abstract

The purpose of the Refinaria Fluminense S.A. case is to illustrate the operation of an oil refinery and the challenges that accountants and managers face in assessing the costs of oil products, evaluating inventories, ascertaining the results of refinery operations and analyzing decisions to continue processing individual products to increase their value added. It was designed for discussion in the subjects of Management or Cost Accounting in undergraduate and postgraduate courses in Accounting, Administration and Production Engineering. The narrative begins with information that shareholders are demanding that management take steps to increase the company's profitability. In analyzing the profitability of products manufactured and marketed, managers realize that they do not sufficiently understand the distribution and behavior of product costs. Convinced of the importance of this information, managers decide to hire a cost specialist who promises to solve their doubts and help them analyze the decisions they will have to make to meet the shareholders' wishes. Students are then asked to take on the role of the specialist and develop the proposed questions. One of the most relevant contributions of the case is that it provides the opportunity for students to confront the stylized textbook exposures with the conditions found in companies. This is particularly true in the case of the application of the net realizable value method in processes with multiple splitoff points, a case rarely commented on in the vast majority of books.

Author Biographies

Raphael da Fonseca, Universidade Federal do Rio de Janeiro (FACC/UFRJ)

Mestrando em Ciências Contábeis pela Faculdade de Administração e Ciências Contábeis da Universidade Federal do Rio de Janeiro (FACC/UFRJ)

Moacir Sancovschi, Universidade Federal do Rio de Janeiro (FACC/UFRJ)

D. Sc. em Administração pela COPPEAD/ UFRJ e Professor Departamento de Contabilidade e Curso de Mestrado e Doutorado em Ciências Contábeis da FACC/UFRJ

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Published

2017-05-25

How to Cite

da Fonseca, R., & Sancovschi, M. (2017). Teaching Case: The Allocation of Joint Costs in Processes with Multiple Splitoff Points at Refinaria Fluminense S.A. Journal of Education and Research in Accounting (REPeC), 11(2). https://doi.org/10.17524/repec.v11i2.1536

Issue

Vol. 11 No. 2 (2017): Abril-Junho

Section

Teaching Cases in Accounting

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