Difference between joint and main/by products in common production

Last updated: 20.04.2017

In common production process are simultaneously processed two (or more) products. If both products are of similar economic importance, they are JOINT PRODUCTS. But if they are not, one is considered to be MAIN and the second BY-PRODUCT.  

And what are the factors to take into account to distinguish them?

  • joint product has higher economic importance than by-product
  • joint products have similar sales value, whether  by-product has much lower sales value than the main product
  • by-product is not the primary aim of the production - it is manufactured “by the way” during the production of the main product

 

The distinction is important for product costing as:

  • for two (or more) joint products  -  common costs are allocated using selected allocation base
  • for main and by product – the revenues obtained from selling by product are deducted from the common costs and the difference is used to value the main product 


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