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By-Products are the substances which come out as output except the main or the principle product during the manufacturing process or during the chemical reaction which is explained in By-Product Assignment Help. These products are the result of the joint production processes. But, as compared to the main or the principle product, the quantity of the by-product is very less. The quantity of the by-products doesn’t affect the joint cost or the cost, thus, it can be sold or discarded. Many-a-times, the by-products undergo certain further processing, and then they might be sold. Sometimes, it might be considered as marketable and sometimes, it might be considered as a waste product. There is no significance of any by-products in accounting point of view. By-Products can also be considered as secondary products which arise in the course of manufacturing the main products. Split-off point is the point of separation of the by-products from the main or the principle products. Sometimes, the by-product costing is followed by the reverse cost method. During the time of split off point, the reverse cost method suggests deducting separate cost, selling and distribution cost and reasonable profit to arrive at the cost of by-product. Clients looking for various notes regarding by-product can refer By-Product Assignment Help.
Methods to Deal with By-Product in Cost Accounts
The various methods to deal with the By-Products in Cost Accounts are explained in By-Product Assignment Help as follows
1. Where by-products are of small sales value: – Generally, in such a case, the by-products are considered as impracticable and uneconomical to attempt to allocate any parts of the joint cost of production to the by-products up to the points of split off. The following points given in By-Product Assignment Help deals with the amount realized by the sales of the by-product.
• The by-products may be considered as pure profit and thus be credited to the loss account and costing profit, thus treating the by-products as miscellaneous income or additional sales revenue.
• The product from which the by-product has arisen might be credited. Of course, the due allowance will be made for the handling charges or the expenses incurred in affecting the sales of the by-product.
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Where By-Products are of Considerable Sales Value
In the situation where the by-products are of considerable sales value, it will be appropriate to calculate the exact cost of the by-products and thus treating them as the joint products. This requires the allotment of the joint cost of the products up to the split off point. The main product will be credited with the cost of the by-product up to the split off and the by-product account will be debited with the cost of the by-product. Thus, any profit or loss will be will be transferred to the loss account and the costing profit.
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