Joint production is a production process that yields two or more products simultaneously. A production process can yield co- products and by-products (residual materials). By-Product is a Product which is manufactured at the time that another product (main product) is produced.
What is joint product and by-product in cost accounting?
A joint cost is a cost that benefits more than one product, while a by-product is a product that is a minor result of a production process and which has minor sales. The point at which the business can determine the final product is called the split-off point.
What is the difference between end product and by-product?
End product is the final good produced by the country,whereas, the by- product is the raw material used to make the end product.
What co product means?
Co-products are desirable secondary goods that are generated during the manufacturing process and can be sold or reused profitably. They might also be products that are usually manufactured together or sequentially because of product or process similarities.
What is main product and by-product?
The term “by product” is generally used to denote one or more products of relatively small total value that are produced simultaneously with a product of greater total value. The product with the greater value, commonly called the “main product“, is usually produced in greater quantities than the by products.
What are the examples of by product?
Molasses, for example, is a byproduct of refining sugar. Food production results in many byproducts: wheat germ is a byproduct of wheat milling, and orange and lemon oil are byproducts of citrus fruit being processed into juice.
What are main products and by-products?
In the context of production, a by-product is the “output from a joint production process that is minor in quantity and/or net realizable value (NRV) when compared with the main products”. Because they are deemed to have no influence on reported financial results, by-products do not receive allocations of joint costs.
What you mean by joint product?
In Economics, joint product is a product that results jointly with other products from processing a common input; this common process is also called joint production. A joint product can be the output of a process with fixed or variable proportions.
What’s the difference between a by product and a joint product?
The major points of difference between joint product and by-product are given below: A Joint product is one which is manufactured ancillary to the production of the main production, hence the purpose is intentional. However, a by-product is purely an unintentional consequence of the production of the main product.
How are joint and byproduct costs related to price?
The costs allocated to joint products and by-products should have no bearing on the pricing of these products, since the costs have no relationship to the value of the items sold. Prior to the split-off point, all costs incurred are sunk costs, and as such have no bearing on any future decisions – such as the price of a product.
When do joint products and by products gain individual identity?
The products arising at that split off point can either be sold at that point ( if there is adequate market ) or they can either be further processed ( if no market is available at split off point ). The costs incurred beyond point are called separable costs. After this point, the joint products or by-products gain individual identity. �
When to cancel production of a joint product?
In short, if a company is unable to set individual product prices sufficiently high to more than offset its production costs, and customers are unwilling to accept higher prices, then it should cancel production – irrespective of how costs are allocated to various joint products and by-products.
