Chapter 13: Process Costing – Joint Products

Where one process produces several products, those with a full sales value are joint products; a product produced incidentally with a relatively low sales value is a by-product. The sale proceeds of a by-product are subtracted from the joint costs of the process, and the net total cost is then split between the joint products.

During August the following costs were incurred in a process: materials (3,500 kg) $5,000, labour and overheads $2,300.

The production from the process was: product A 1,000 kg, selling price $5 per kg; product B 2,000 kg, selling price $2 per kg; by-product X 500 kg, scrap value $0.20 per kg.