JOINT AND BY-PRODUCT COSTING

Costing method used for joint products or joint products with by-products.

JOINT PRODUCTS – products that went through the same process, but are essentially different from each other. Their value is are not significantly different from each other. Example: Petroleum (raw material) goes through a distillation process which results to various products such as gasoline, and kerosene.

BY-PRODUCT – products that went through the same process as joint products, but the value of which are insignificant compared to the joint products. Meaning, their value is really low.

This is mainly used in process costing, as these products go through the same process and are mass produced.