By-product Costing and Joint Product Costing

Abstract

In process costing it is usual to distinguish between the main product of the process and by-products or joint products. By-products are the output of a process that have secondary economic significance to the main product of the process and they may require further processing to make them marketable. Joint products are the output of a process in which there is more than one product and all the products have similar or equal economic importance. They use the same commonly processed materials up to a certain point (the split-off point), although they may require further processing to make them marketable.