What are Joint Products?

Joint products are multiple products generated by a single production process at the same time. 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.

A product is only considered a joint product when each of the items being produced has roughly equal economic importance. If (as is more common) they have very different market values, then the more valuable one is classified as the main product, while the other is classified as a by-product. If there is no market value associated with a secondary product, then it is treated as scrap.

Examples of Joint Products

Here are several examples of joint products:

Crude oil refining (which produces gasoline, diesel, kerosene, and other products)
Meat processing (which yields cuts of meat, hides, bones, etc.)
Dairy processing (where milk can be processed into cream, butter, cheese, and whey)

Each of these industries faces the challenge of managing joint costs and balancing the production and profitability of multiple valuable outputs from a single process.