The revenues from by-products may be used to offset the costs of the joint production process or they may be reported as other revenue on the income statement (with no related cost of goods sold).

Question

Quizplus · Accepted Answer

By-products are secondary products obtained during the manufacturing process of the main product. The revenues from by-products can either be used to reduce the joint production costs, thereby lowering the cost of the main product, or they can be reported as other income on the income statement, often without an associated cost of goods sold, depending on the accounting policy of the company.

The Revenues from By-Products May Be Used to Offset the Costs