So, the manufacturer can afford to price the ink at premium levels as his customer base is almost guaranteed. E.g. A car manufacturer also sells other decorative accessories like car mats, seat covers, navigation system etc. There is no compulsion on the customer to purchase these but buying them from the manufacturer provides one excellent, seamless product package.
Companies must build highly specialized facilities to store this material and hire employees who can take caution in handling, transporting, and disposing of it. There are numerous other processes that create useful by products. The main products of this industry are whole logs, but every tree has branches and smaller sections that can’t be used as full logs. These sections are typically ground up in a wood chipper to make wood chips. These are then sold to professional landscapers and home garden enthusiasts.
Accounting for Byproducts
The typical accounting for any revenues generated from byproducts is to offset them against the cost of goods sold for the primary products that are generated from the manufacturing system. It is also acceptable to record these revenues as miscellaneous revenue. However, recording the sale of byproducts as miscellaneous revenue will result in a minor increase in the amount of reported sales. You do not need to assign any material cost or overhead cost to byproducts; instead, it is easier to assign all production costs to the primary products that are being manufactured.
This gives a much needed competitive advantage to the business in the market. Thus, a sale of a By-Product can be beneficial to the business if that is priced correctly and at optimum levels by the business. A byproduct is usually unintended initially, but that doesn’t mean it is unwelcome.
This income is too insignificant to be accounted for under a separate head. A byproduct, also spelled by-product, is a secondary or additional product created by an initial process, behavior, or task. A byproduct may be an unintended, but not necessarily unwelcome, result of an initial process. For instance, the grape seed oil is a byproduct of the winemaking process, and molasses is a byproduct of the refining of sugar. Byproduct means an ancillary product or secondary result of a primary process. It is a product created through the process of something else or from an offshoot of the original product.
Examples of By-Product
Byproduct is a compound word made up of the prefix bi- and the root product. This is a well-used and recognized word in the English language, and knowing its proper use and spelling is essential.
A byproduct is an incidental product that is created by a manufacturing process that creates multiple products. The other products created by the process are considered to be the primary output of the system. It may be possible to sell byproducts; alternatively, any revenues to be gained from byproducts are so minor that they are simply discarded as waste.
Product is a classical Latin word from productum, meaning “something produced.” The English use, to mean “anything produced,” is from the late 16th century. The hyphenated version, by-product, is slightly more popular than the unhyphenated spelling, but both are considered correct. Byproduct, or by-product, is a compound word and is never written as two separate words. And it should never be spelled as bi-product since by- is the accepted English prefix spelling.
What Is a Byproduct? – Definition & Examples
Many byproducts are used, such as bran and germ from flour processes, lanolin oil from wool processing, and buttermilk from butter processing. Unfortunately not all by-products have the same salability and value as the dairy farmers’ and loggers’ operations. Some by-products are simply waste that can’t be used for anything. The plant generates electricity using a nuclear process that produces nuclear waste. Not only is this material not salable, it is hazardous to store and dispose of.
A by-product or byproduct is a secondary product derived from a production process, manufacturing process or chemical reaction; it is not the primary product or service being produced. Thus, pricing the by-products is an essential strategy for the business. E.g. A crude oil refinery extracts at the end of its refining process. That substance is Ethylene – a vital ingredient in manufacturing all the plastic products like polythene shopping bags, PVS pipes, etc. Thus, knowing the commercial importance, the company can actually sell it at lucrative prices. Many times, the production process results in the creation of Leftover products.
Let’s take a look at the etymology of the word byproduct and how to use it properly in speech and writing. Danielle McLeod is a highly qualified secondary English Language Arts Instructor who brings a diverse educational background to her classroom. With degrees in science, English, and literacy, she has worked to create cross-curricular materials to bridge learning gaps and help students focus on effective writing and speech techniques. Currently working as a dual credit technical writing instructor at a Career and Technical Education Center, her curriculum development surrounds student focus on effective communication for future career choices.
What Does Byproduct Mean?
It is produced during the production process of the main product. There aren’t any different raw materials or processes used for the same. To sell it in the market, some processing may be done on it, if required. When there are multiple products created from a production process, the byproducts can be discerned by seeing which ones have a minor resale value in comparison to the value of the other products. If there is no clear differentiation between primary products and byproducts, treat them all as primary products.
These leftover products may not be as valuable as the main product, but they too have some economic value. Thus, these leftover products, known as by-products can be sold off as independent products in the market. The revenue generated from the sale of this product can be used to meet some expenses of the business or bring down the costing of the main product.
- So, the manufacturer can afford to price the ink at premium levels as his customer base is almost guaranteed.
- The other products created by the process are considered to be the primary output of the system.
- Thus, a sale of a By-Product can be beneficial to the business if that is priced correctly and at optimum levels by the business.
- Byproducts occur in almost all industries not just manufacturing.
- Product is a classical Latin word from productum, meaning “something produced.” The English use, to mean “anything produced,” is from the late 16th century.
E.g. A printer manufacturer sells color ink refills for the printer. To maintain the performance of the printer, it is advisable that the customer uses the printing ink from the same manufacturer. Hence, here the customer doesn’t have much choice but to buy the ink from the manufacturer only.
What Is the Definition and Use of Byproduct?
Examples of byproducts are manure from a feedlot operation, sawdust at a sawmill, salt from a desalination plant, and straw from a grain harvesting operation. It is simply an industrial wastage that needs to be disposed of. As discussed in the example above, Ethylene is very valuable and it can be sold at premium prices and the profits earned can be used for capacity building for the mainstream business. Generally, any company will follow one or more pricing strategies for their product mix. These pricing strategies need to be referred so that we can understand pricing later on. So here, the company has to incur those expenses in waste disposal as per the legal requirements and write-off these expenses in the regular profit and loss account.
AccountingTools
Thus, the company has to price these accessories at attractive, competitive prices so that the customer can’t resist the offer. Actions, processes, and behaviors have an initial result, but many also have a secondary reaction called a byproduct. Byproducts occur in almost all industries not just manufacturing. Dairy farmers breed and raise cows to produce milk in order to sell it to grocery stores, restaurants, and distributors. He or she is interested in producing milk, but the manure is created during the process.
