Joint product Definition & Meaning

what is a joint product

There are some industries where two or more products come out of a single raw material which is equally important. Two or more products are produced from the joint production process in one phase of production. This phase or point is referred to as the split off point. The joints products are not produced or emerged incidentally. The production of joint products is the deliberate intention on the part of management.

  • From this point onwards, the two products can be processed individually.
  • 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.
  • Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications.
  • A joint cost is incurred before the point at which separately identifiable products emerge from the same process.

This is the significance of processing industries. If the output of a process has very less value or no value, they may be regarded as scrap or waste. Sometimes, the output of a process may get its value after further processing. If the total value of the joint product is significant, then additional analytical detail can improve decision making by management.

What is a joint cost?

Our work has been directly cited by organizations including Entrepreneur, Business Insider, Investopedia, Forbes, CNBC, and many others. Finance Strategists is a leading financial literacy non-profit organization priding itself on providing accurate and reliable financial information to millions of readers each year. Physical relationships that necessitate simultaneous production serve as a link between numerous products. Fixing most profitable product mix may increase the profit. Correct collection, compilation and classification of process costs.

To the point of split-off or the point where these products emerge as individual units, the cost of the products forms a homogeneous whole. The joint product cost results from the creation of two or more different products from a single cost factor. This definition emphasizes the point that the manufacturing process creates products in a definite quantitative relationship. Joint products refer to two or more products that are created together.

What is a joint production activity?

For example, in the case of assembly line manufacturing, many machines and work stations are used to complete multiple products produced on a single assembly line. The costs incurred in the production of joint products are undifferentiated until the specific split-off point. After this split-off point, costs are allocated to individual products. In oil industry kerosene, gasoline, fuel oil, lubricants etc. are all produced from the same product, crude petroleum. They are of equal important; hence they are called joint products. Joint products may be defined as the production of two or more products from the same basic raw material in a process and require further processing to increase the value of such products after a point of separation.

what is a joint product

The profitability in selling of joint products and by-products can be determined. The effect of increase or decrease in cost is to be find out due to increase or decrease in the output of joint products. The management has little or no control over the maintenance of quality of joint products.

Characteristics of Joint Products

These products incur undifferentiated joint costs until a split-off point, after which each product incurs separate processing. Prior to the split-off point, costs can only be allocated to the joint products. Joint products that are produced from the same basic raw materials, are comparatively of equal importance, are produced, simultaneously by a common process and may require further processing after the point of separation. In a manufacturing process, a raw material may be converted into finished product. During the process of conversion, there is an emergence of waste, scrap, joint products and by products.

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. At Finance Strategists, we partner with financial experts to ensure the accuracy of our financial content. (b) In coke ovens—gas and tar are treated as by-products.

what is a joint product

In some industries where two or more products of equal importance are simultaneously produced, such products are regarded as joint products. In short, we can say, when two or more products of equal importance are simultaneously produced, then they are known as joint products. Sometimes, the joint products may require further processing.

Definition of Joint Product

(a) In soap-making industry—in the process of mixing and boiling ingredients many rejections take place. These rejections are collected for recovery as by-product. The method or pattern of production may be determined. The following are the objectives of joint cost analysis. There is no exact classification of the output as joint product or by product.

what is a joint product

The joint product of one concern may be a by-product of another concern. Our mission is to empower readers with the most factual and reliable financial information possible to help them make informed decisions for their individual needs. Our writing and editorial staff are a team of experts holding advanced financial designations and have written for most major financial media publications.


We follow strict ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources. This team of experts helps Finance Strategists maintain the highest level of accuracy and professionalism possible. Our team of reviewers are established professionals with decades of experience in areas of personal finance and hold many advanced degrees and certifications. If it’s not possible to determine the sale price of each product at the split-off point, the gross margin method may be the only option.

These separable product costs are identifiable with the individual product and generally need no allocation. If the secondary product has no saleable value, it’s considered spoilage, waste or scrap. (ii) Joint products are produced simultaneously while by-products are produced incidentally. The sale value of all the joint products is relatively high and none of the joint products are significantly greater in value than other joint products. Generally, the joint products have the following characteristics.

The classic example of joint products is found in the meatpacking industry, where various cuts of meat and by-products are processed from one original carcass with one lump sum cost. Joint products are produced simultaneously by a common process or series of processes, with each product possessing more than nominal value in its produced form. To be considered a joint product, each product must be of roughly equal economic importance. If the two products have considerably different market values, the more valuable product is considered the main product, and the secondary product is known as a by-product. The relationship between the cost and profit can be studied to fix the price of joint products.

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. Joint production activities are those that involve processing different products together with costly processes, rather than using independent methods to process each product.