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Irrigation Dictionary : Table of Contents (members login required)\t
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9208. Vendability method : This method for dividing joint costs is based on the theory that under conditions of perfect competition, a producer of joint products will so arrange output that long-term revenues from joint products must at least equal the fixed cost plus the variable cost of the combined output. It divides the cost of joint facilities of a project by first subtracting from revenues obtained from each project feature the specific cost incurred for that feature and, second, capitalizes the remaining revenues at an appropriate rate of interest. The result obtained in the second step should equal or set a ceiling on the amount of the cost of joint facilities to be assigned to a particular feature.

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