Operations Management, Cost Accounting, Joint and By-Product Costing - 236

when determining joint product costing, what is the accounting treatment applied to scrap and by-products?

Costs:

Joint costs are not allocated to scrap or by-products; costs incurred to process scrap or by-products after split-off are offset against proceeds from the sale of the scrap or by-product

Proceeds:

Proceeds from sale of the scrap or by-product are used to reduce joint product overhead costs.  If they can be identified with a particular direct material, they may be offset against the cost