Joint costs are allocated to main products but not to by-products.

Question

Quizplus · Accepted Answer

Joint costs are common costs incurred in producing multiple products simultaneously. These costs cannot be directly traced to any individual product and are allocated to the main products. However, by-products are secondary products that are produced incidentally to the main product and have relatively low sales value or are sometimes given away. By-products are typically not allocated any joint costs as they are not considered a primary focus of the production process.

Joint Costs Are Allocated to Main Products but Not to By-Products