Contribution margin method

According to this method, joint costs are segregated
into two parts - variable and fixed. The variable costs are apportioned over the joint
products on the basis of units produced (average method) or physical quantities. In casethe products are further processed after the point of separation, then all variable cost
incurred be added to the variable costs determined earlier. In this way total variable cost
is arrived which is deducted from their respective sales values to ascertain their
contribution. The fixed costs are then apportioned over the joint products on the basis of
the contribution ratios.