Skip to content

CA Intermediate · Cost and Management Accounting · Joint Products and By Products

Under ICAI cost accounting treatment, when a by-product has a small net realisable value and is of minor importance, the usual method of accounting for it is to:

A minor by-product's net realisable value is credited either to the joint process account, reducing the cost of the main products, or to the costing profit and loss account as income. Joint costs are not apportioned to it, and its sale is not ignored.

  1. AApportion joint costs to it on physical units
  2. BCredit its net realisable value to the joint process cost or to the costing profit and loss accountCorrect
  3. CCharge it a share of the main product's selling expenses only
  4. DIgnore it and not record the sale at all

Explanation

By-products of small value are treated by crediting the sales proceeds (net of any separate costs) either to the joint process account, reducing the cost of main products, or to the profit and loss account as other income. Apportioning joint cost to them is done only for significant by-products.

Did you get it right without looking?

One question tells you little. A timed set on Joint Products and By Products shows your real accuracy, how long you take and where you lose marks.

Practise Joint Products and By ProductsFree diagnostic mock

More Joint Products and By Products questions