Joint Product vs. By-Product: What's the Difference?
Joint products are multiple valuable products produced simultaneously from a single process, while by-products are secondary products derived from producing the main product.
A joint product refers to any of multiple primary products that are produced concurrently using the same input or process. Such products often have similar value and importance in the market, making neither superior nor inferior to the other.
Conversely, a by-product is a secondary outcome of producing the main product. Unlike joint products, by-products typically have less economic value compared to the main product. While joint products share a co-equal status, by-products are usually considered supplementary or incidental.
When considering joint products, it's essential to understand that each product generated in the process holds its weight in terms of value. For example, in petroleum refining, gasoline and diesel can be viewed as joint products since they both have significant value and are produced concurrently.
By-products, on the other hand, are often unintended results from the primary production process. For instance, while producing wheat flour, wheat bran emerges as a by-product. It has value but is not the primary focus of the production process.
In essence, while joint products arise from a production process with equal emphasis and value, by-products are secondary results with often lesser economic significance.
Main products of the process
Comparable to other joint products
Generally lower than the main product
Often unintentional or incidental
Holds significant market value
Might have limited market value
Produced in larger volumes
Usually produced in smaller volumes compared to the main product
Joint Product and By-Product Definitions
Outputs with similar market value.
In livestock, meat and leather are considered joint products.
Might have limited market application.
Slag is a by-product of metal smelting.
Equal emphasis in production.
In metal smelting, different metals can be joint products.
Often unintentional result.
Glycerin is a by-product of soap making.
Products produced concurrently in a single process.
Gasoline and diesel are joint products of refining.
Secondary outcome of the main production.
Wheat bran is a by-product of flour milling.
Results from common raw material use.
Cracking crude oil yields several joint products.
Has economic value but less than the main product.
Molasses emerges as a by-product in sugar production.
Neither product is secondary.
The production of cream and skimmed milk are joint products.
Not the primary focus of production.
In cheese production, whey is a by-product.
Something produced in the making of something else.
Why are joint products important in cost accounting?
Allocating costs between joint products is essential to determine the profitability and pricing of each product.
What is a common example of joint products?
Crude oil refining often results in joint products like gasoline, diesel, and jet fuel.
How are costs allocated to joint products?
Common methods include the sales value method, physical measure method (e.g., weight), and other consistent and rational bases.
How does joint product differ from by-product?
While both are outputs from a production process, joint products hold relatively similar value, whereas by-products hold less value compared to the primary product.
Can joint products exist without by-products?
Yes, it's possible to have joint products without any by-products.
Is there a primary product in joint production?
No, in joint production, each product holds significant value, and none is typically considered primary or secondary.
Can by-products be further processed?
Yes, many by-products undergo further processing to enhance their value or utility.
What is a by-product?
A by-product is a secondary output derived from producing the main product; it has lesser value compared to the primary product.
Why are by-products important for sustainability?
Utilizing by-products reduces waste, promotes resource efficiency, and often leads to more sustainable production practices.
What is a joint product?
A joint product refers to multiple end products that are produced simultaneously from a single input or process.
Can a product be both a joint product and a by-product?
No, a product is either classified as a joint product or a by-product based on its relative value and production context.
Why are joint products relevant in decision-making?
Understanding the costs and revenues associated with joint products helps in making decisions about production levels, product mix, and pricing.
Is joint production more common in certain industries?
Yes, industries like agriculture, petrochemicals, and meat processing often have joint products.
Is a by-product always of lesser value?
Typically, yes. By-products are usually of lesser economic value compared to the main product.
Are by-products only found in manufacturing?
No, by-products can be found in various sectors, including services, agriculture, and more.
How are by-products treated in accounting?
By-products can be accounted for by deducting their sales value from the cost of the main product, or they can be treated as additional revenue.
Are by-products always sellable?
Not necessarily. While many by-products find a market, some might be disposed of if they lack economic value or utility.
What's a common example of a by-product?
In the lumber industry, sawdust is a by-product of producing lumber.
Can a by-product become a primary product?
Yes, if market conditions change or further processing enhances its value, a by-product can become more valuable or even a primary product.
How do companies determine the value of a by-product?
The value is typically determined by market prices, potential uses, or costs saved from not having to dispose of the by-product.
Written bySumera Saeed
Sumera is an experienced content writer and editor with a niche in comparative analysis. At Diffeence Wiki, she crafts clear and unbiased comparisons to guide readers in making informed decisions. With a dedication to thorough research and quality, Sumera's work stands out in the digital realm. Off the clock, she enjoys reading and exploring diverse cultures.
Edited bySawaira Riaz
Sawaira is a dedicated content editor at difference.wiki, where she meticulously refines articles to ensure clarity and accuracy. With a keen eye for detail, she upholds the site's commitment to delivering insightful and precise content.