Proper

Abstract

This is a case study for an optimal joint cost allocation method and the split-off point at an automobile dismantling and recycling business of company in Korea. Finding out an optimal joint cost allocation method and split-off point is important because the optimal change could alter joint costs allocation for products and thereafter the company’s decision on the resource allocation and production decisions. Until 2014, the company considered the vehicle acquisition point as split-off point and allocated joint costs based on the weight of the recyclable parts of the vehicle. Recognizing a potential distortion of costs due to the split-off point and weight based joint cost allocation, from 2015, the company changed split-off point from vehicle acquisition point to dismantling process starting point after inspection and also changed joint cost allocation base from weight to sales value of the vehicle parts. This study examined the procedural changes in the accounting system of the company A. It is the first case study for a change of the joint cost allocation method and split-off point in the Korean automobile dismantling and recycling business. Thus, it provides an adoptable and reasonable cost accounting method for sustainable development of the automobile dismantling and recycling business. It could help the Korean government set to implement the extended manufacturer responsibility system for end-of-life vehicles.