By Product Definition and methods of apportionment of Joint cost to by product.

By Product , By Product Definition and methods of apportionment of Joint cost to by Product

By Product , By Product Definition and methods of apportionment of Joint cost to By-Product

Please note all CA Intermediate students this article covers the second part of the topic i.e. By-product same way as in joint product I tried to cover and make you understand all the aspects of a by-product in this article. Hope this will help in creating an understanding about by-product.

Meaning and the basic concept of by-product :

As the name indicates by-product is a product which is a result of processing of the main product. In other words, product in addition to the manufacturing of the main product. Basically, it is produced from the waste of scrap processing, which comes out as a result of processing of manufacturing of the main product. It can be called secondary or subsidiary product. It does not have significant importance as the joint product does.

The point at which it is separated from main product is called split-off point.

Characteristics of by product

  1. By-product is not of significant importance it can be treated as scrap or waste produced as a result of processing main product.
  2. It is an incidental result of processing main product.

Subscribe our YouTube channel for free videos shared by experts of CA.

Apportionment of Joint Cost to by product :-

Net realizable value method : Realization from the sale of by-product may be deducted from the cost of production or processing of total produce output so as to arrive at cost of production of the main product. If by-product needs further processing for additional advantage and needs to incur additional expenses for further processing expenses has to be deducted from the net realizable value of by-product. And then such net realizable value, such net realizable value is deducted from main product to arrive at the actual cost of the main product.  Separate accounts are suggested to be maintained for collecting additional expenses incurred on

  • Further processing of the by-product.
  • The attributable cost to by-products like selling and distribution and administration expenses. ‘

Standard cost in technical estimates : Averaging past cost records may be one of the technical estimates. Or a technical estimate of a number of units of original raw material going into the main product and number of units of byproduct formation or some other consistent basis adoption.

This method can be used where comparative prices of similar products are not available. Or by-product is not saleable in the condition in which it emerges.

Comparative prices :   this method compares the prices of by-product with the prices of other similar products and alternative material. But this method cannot be used where the similar product of comparison is not available in the market. In such case, technical estimates will work.

Reuse basis : Some of the by-products have the nature to be reused or reprocessed in the same process as a part of the input. In such a case value put on the by-product should be same as the material introduced into the process. However, if by-product can be used only once then value should be same as to the material introduced into the process.

That is all about definition and valuation of by-product. I hope this article makes CA intermediate students feel one inch taller about the knowledge in comparison to their previous status.

For Classes of CA Inter by experts, click CA Inter online Classes. Get CA Online Classes & Video Lectures at Takshila Learning,

For the detailed knowledge and learning please join Takshila Learning.

CA Inter – CA intermediate online classes Video Lecture Offline

For more articles and videos for CA, Classes click below or subscribe our channel

Follow us on Pinterest

Follow us on Youtube

Follow us on Facebook

Follow us on Blogarama

Call us: 8800999280/83/84 or fill the form for any other details:

Share and Enjoy !

0 0
May 8, 2021

0 responses on "By Product Definition and methods of apportionment of Joint cost to by product."

Leave a Message

Your email address will not be published. Required fields are marked *

© 2021-22 Takshila Learning. All Rights Reserved.
Request Callback
close slider
For course & fee related queries, Leave your details and our counsellor will get back to you or Call us at 8800-999-280
  • This field is for validation purposes and should be left unchanged.