There are many industries such as sugar industries, chemical industries, agricultural product industries, etc., where more than one products of equal or differential importance are manufactured, either concurrently or during the production of the main product. In this context, joint products and by-products are often studied. Joint products are the products which are produced simultaneously, with the same raw material and process, and requires further processing to become a finished product after they get separated.
On the other hand, the by-product is nothing but the subsidiary product which emerges out, in the course of manufacturing of the main product.
So, the main difference between joint product and by-product lies in the fact that whether the company produced the product on purposely, or it emerged additionally, as a result of ongoing production. Have a glance at the article to know, other differences amidst the two concepts.
Content: Joint Product Vs By-Product
|Basis for Comparison||Joint Product||By-Product|
|Meaning||When the production of two or more products of similar value, are made together with same input and process, is called joint product.||The term by-product means a product which is incidentally produced, during the processing operation of another product.|
|Economic Value||Joint products have same economic value.||Economic value of by-product is lower than the main product.|
|Input||Raw material||Waste or scrap of the main product.|
|Further Processing||Required to turn the joint products into finished product.||Not required.|
Definition of Joint Product
Joint products are the products that are simultaneously produced with the same input, by a common process and each possesses considerably high sale value that none of them can be recognized as the major product. In joint products, when raw material is processed, it results in more than two products. The production of joint products is performed consciously, by the management of the respective organization, i.e. the management aims at producing all the products.
There is a separation point called as a split-off point, from where the products are separated and identified. At this stage, either the products are sold directly or go for further processing, to turn out as finished product. The amount incurred up to the split-off point is termed as joint cost.
Example: Common examples of the joint product are diesel, gasoline, lubricants, paraffin, etc. are obtained as joint products, in the processing of crude oil.
Definition of By-Product
By Product can be understood as the subsidiary or secondary product which is incidentally produced, along with the main product, and has saleable or usable value. While producing the main product, there are instances when another product emanates which are of minor importance, as compared to the main product, are the by-product.
These are produced from the discarded material, i.e. scrap or waste of the main process. The split-off point is the stage, at which the by-products are separated from the main product. On the basis of market conditions, by product can be classified as:
- Products sold in their original form.
- Products that undergo subsequent processing before sale.
With the change in the economic conditions, the relationship between by-products and main product also encounters change, as when the economic value of the by-product is greater than the main product, then the by-product of such an industry becomes the main product and vice versa.
Key Differences Between Joint Product and By-Product
The substantial differences between joint product and by-product are given hereunder:
- Joint Product refers to, two or more products, whose raw material requirement is common, as well as they go through the same manufacturing process, up to a certain point of production, after which they are either sold or processed further. On the contrary, by-product alludes to the products of low usable value which are produced, concurrently with the product having high usable value.
- Joint products have common saleable values, and that is why none of them can be considered as the major product. Conversely, By-product’s saleable value is comparatively lower than the main product.
- The production of the joint product is performed intentionally by the management of the respective organization, whereas there is no intention to manufacture the by-product, and so they are produced incidentally.
- Joint products are produced from the raw materials. Unlike by-product, that is produced out of discarded material from the main process.
- In the case of joint products, subsequent processing is often required to enhance the quality or turn them into finished products, in which additional money is expensed. As against this, most of the time, by-products are sold in the original form but can be further processed, if it can generate high value.
Suppose the company’s object is to produce two products Product A and Product B side by side, as the initial process and input requirements of the two products are common, then these two will be called as joint products.
Suppose a company basic aim is the production of Product A, but fortuitously B and C are produced, during the manufacturing process, then B and C are termed as the by-product, as the company has no intention to produce the same.
Both joint products and by-products are produced with the same raw materials and manufacturing process, but they are different concerning the purpose.While the joint products are the primary results of operations, the by-product is a secondary outcome of the process.