Treatment of joint (common) costs in case of by-products

Last updated: 10.04.2017

During the production process can be manufactured at once two or more products. If they are NOT of similar economic importance, then the more important product is called MAIN PRODUCT and the less important product BY-PRODUCT.

As by-product´s value is usually negligible, net realizable value (or sales value) of by-product is usually deducted from the joint costs and the difference is used to value the main product.

 

The treatment in cases where the products are of similar economic importance and no product is therefore less important than the other (both are so called joint products) is as follows.



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