CHAPTER 5 *Indirect Materials (custodial supplies for the

factory) and indirect labor (salary of the plant

PROCESS AND COST ACCOUNTING –
manager, that cannot be directly associated with
GENERAL PROCEDURES
the particular department are charged to Factory
Overhead.

- Cost Accounting provides management with

accurate information about the cost of
Actual Costs for the period
manufacturing the product
- The type of cost accounting system - Collected in a general ledger control
depends on the nature of its manufacturing account to which postings are made from
operations the appropriate journals
- At the end of the month, based on the data
Basic Cost Systems
reflected on the analysis sheets, total
1. Job order cost system actual factory overhead is distributed to the
- Appropriate when differentiated departmentalized factory overhead
products or services are provided on accounts.
a special-order basis
Control account
- Focal point is the job
- Cost of materials, labor, and - Supported by a subsidiary ledger, which
overhead are accumulated for each consists of factory overhead analysis
job and divided by the number of sheets that show detailed allocation of
units produced is the cost per unit costs to the individual departments
- Primary objective: determine the
Process Job order
cost of producing each job Application of Use of Overhead is
completed during the period and the Factory Overhead predetermined applied to the jobs
cost that has been incurred to date overhead rates is through
also common, but predetermined
on each unfinished job overhead is rates.
2. Process cost system applied to
- Used when goods or services of a departments The amount of
rather than jobs overhead applied
similar nature are provided is calculated by
- Focus is the cost center to which multiplying
costs are assigned predetermined
overhead rate by
- Costs accumulated by a cost center selected
are divided by the number of units allocation base
produced in that cost center to (direct labor
hours, direct labor
compute the cost per unit
cost, machine
- Primary objective: To compute the hours, or any
unit cost of the products completed other appropriate
and cost to be assigned to ending method)

work in process inventory.

Process Job order
Materials Charged directly Charged to
to the specific jobs or
departments in orders
which they are Product Cost in a Process Cost System
incurred
Total cost charged to the department
Labor Charged directly Charged to Unit cost in each department =
number of units produced during the period
to the specific jobs or
departments in orders Total cost of each unit finished = combined unit costs of all
which they are departments used in the manufacture
incurred of the product
Factory Overhead Accumulated from Accumulated from
various journals various journals
  Nondepartmentalized Factory (single
department, single product in a continuous
output)
- Costs of operating the factory are
summarized at the end of each
accounting period
- Total costs incurred are divided by
the quantity of units produced to
calculate cost of each unit
manufactured during the period
Materials xx
Labor xx
Factory Overhead xx
Total cost of production xx
Divide: Unit output for the period xx
Unit cost for the period xx
 Departmentalized Factory (several
departments, products accumulate costs as
they pass through each successive
production department)
1. Costs of materials, labor, and
factory overhead directly
identifiable with a department are
charged to the department
2. Costs of the factory service
departments (Maintenance and
Human Resources) are allocated
to the production departments
3. Costs added by prior production
departments are carried over to
successive production
departments
Work in Process Inventories
 If there is no ending work in process:
Unit cost = total production cost incurred / number of units
produced
Departments, however, often have ending work in
process. The calculation of the degree of
completion of unfinished work in process presents
one of the biggest challenges in process costing.
Normally, a factory will have units in varying stages
of completion such as:
1. Units started in a prior period and
completed during the current period
2. Units started and finished during the current
period
3. Units started during the current period but
not finished by the end of the period
The primary task is allocating the total cost
between units finished during the period and
units still in process during the period.
2 procedures commonly used for assigning cost
to inventories:
1. Weighted average cost method
- Combines units and costs from the
current period with the units and
costs from the preceding period
Costs in beginning inventory xx
Costs added this period xx
Total costs xx
Divide: Total Equivalent Production xx
Unit Cost for the Period xx
*Equivalent production represents the number of
whole units that could have been completed
during a period, given the amount of work that
was performed.
*Stage of completion represents the fraction or
percentage of materials, labor and overhead costs
of a completed unit that has been completed by
the end of the month.
At the end of the month, the department manager
submits a production report showing the following:
1. Number of units in the beginning work in
process and their estimated stage of
completion
2. Number of units placed in process during the
period
3. Number of units completed during the month
4. Number of units in the ending work in process
and their estimated stage of completion
Cost of Production Summary presents the Inventory Costs:
necessary information for inventory valuation and
Cost of goods finished during
serves as a source for summary journal entries that
Month xx
are posted to the work in process account for each
Cost of work in process, end of month
department and to the finished goods account.
Materials xx
Cost of Production Summary – One Labor xx
Department, No Beginning Inventory Factory Overhead xx
Total Production Costs Accounted for xx
In a process cost system, the reporting of
production and related costs in each department
At the end of the month, the following journal
involves the following:
entries record the factory operations for the month:
1. Accumulating costs for which the
department is accountable Work In Process xx
2. Calculating equivalent production for the Materials xx
period Issued direct materials into production
3. Computing the unit cost for the period
4. Summarizing the disposition of the Work in Process xx
production costs Payroll xx
Recorded direct labor used in production
These data are reported on a Cost of Production
Summary. Work in Process xx
Factory Overhead xx
Applied factory overhead to production
Company Name
Factory Overhead xx
Cost of Production Summary
Various accounts xx
For the Month Ended --- Recorded actual FOH for the period

After preparing the cost of production summary, the

Cost of Production for the month:
accountant can make the following entry for the
Materials xx cost of the goods completed during the period:

Labor xx Finished goods xx

Factory Overhead xx Work In Process xx

Total costs to be accounted for xx

Unit Output for the month: Company Name
Finished during the month xx Statement of Cost of Goods Manufactured
Equivalent units of work in process, For the Month Ended ---
end of month xx
Materials xx
Total Equivalent production xx
Labor xx
Unit Cost for the month: Factory Overhead xx
Total xx
Materials xx Add: Work in Process, beginning xx
Labor xx Less: Work in Process, end xx
Cost of Goods Manufactured xx
Factory Overhead xx
Total xx
 Cost of Production Summary – One *Beginning inventory costs is added to costs
Department, Beginning Inventory incurred in the current period

Company Name Company Name

Cost of Production Summary Statement of Cost of Goods Manufactured
For the Month Ended --- For the Month Ended ---

Materials xx
Cost of Work in Process, beginning of month: Labor xx
Materials xx Factory Overhead xx
Total xx
Labor xx Add: Work in Process, beginning xx
Less: Work in Process, end xx
Factory Overhead xx
Cost of Goods Manufactured xx
Cost of Production for the month:
Materials xx Cost of Production Summary – Multiple
Labor xx Departments, No Beginning Inventory (Mixing,
Blending, and Packaging)
Factory Overhead xx
Total costs to be accounted for xx
Company Name
Unit Output for the month:
Cost of Production Summary - Mixing
Finished during the month xx
For the Month Ended ---
Equivalent units of work in process,
end of month xx Cost of Production for the month:

Total Equivalent production xx Materials xx

Unit Cost for the month: Labor xx

Materials xx Factory Overhead xx

Labor xx Total costs to be accounted for xx

Factory Overhead xx Unit Output for the month:

Total xx Finished and transferred to Blending

Inventory Costs: during the month xx

Cost of goods finished during Equivalent units of work in process,

Month xx end of month xx
Cost of work in process, end of month Total Equivalent production xx
Materials xx
Unit Cost for the month:
Labor xx
Materials xx
Factory Overhead xx
Labor xx
Total Production Costs Accounted for xx
Factory Overhead xx
 Total xx Labor xx
Inventory Costs: Factory Overhead xx
Cost of goods finished and transferred Total xx
to Blending during the month xx Inventory Costs:
Cost of work in process, end of month Cost of goods finished and transferred
Materials xx to Packaging during the month
Labor xx Cost in Mixing xx
Factory Overhead xx Cost in Blending xx
Total Production Costs Accounted for xx Cost of work in process, end of month
Cost in Mixing xx
*The only difference in procedure between this
example and the one for a single-department Cost in Blending
factory is that the goods completed in Mixing are Materials xx
transferred to Blending for further processing rather
Labor xx
than being transferred to the stock room as finished
goods. Factory Overhead xx
Total Production Costs Accounted for xx

Company Name
Company Name
Cost of Production Summary - Blending
Cost of Production Summary - Packaging
For the Month Ended ---
For the Month Ended ---

Cost of goods received from Mixing

Cost of goods received from Blending
during the month xx
during the month xx
Cost of Production for the month:
Cost of Production for the month:
Materials xx
Materials xx
Labor xx
Labor xx
Factory Overhead xx
Factory Overhead xx
Total costs to be accounted for xx
Total costs to be accounted for xx
Unit Output for the month:
Unit Output for the month:
Finished and transferred to Packaging
Finished and transferred to finished goods
during the month xx
during the month xx
Equivalent units of work in process,
Equivalent units of work in process,
end of month xx
end of month xx
Total Equivalent production xx
Total Equivalent production xx
Unit Cost for the month:
Unit Cost for the month:
Materials xx
Materials xx
 Labor xx 1. The entry to record direct materials, issued
into production in each of the various
Factory Overhead xx
departments:
Total xx
Work in Process – Mixing xx
Inventory Costs: Work in Process – Blending xx
Cost of goods finished and transferred Work in Process – Packaging xx
Factory Overhead xx
to finished goods during the month xx Materials xx
Cost in Mixing xx
*The amount charged to Factory Overhead for the
Cost in Blending xx
actual amount of indirect materials an arbitrary
Cost in Packaging xx amount chosen for this example to illustrate how
Cost of work in process, end of month the costs are collected and distributed. This amount
represents the cost of materials that could not be
Cost in Mixing xx
charged directly to the department as direct
Cost in Blending xx materials.
Cost in Packaging:
Materials xx 2. The entry to record direct labor, incurred in
each of the various departments:
Labor xx
Factory Overhead xx Work in Process – Mixing xx
Work in Process – Blending xx
Total Production Costs Accounted for xx
Work in Process – Packaging xx
Factory Overhead xx
*The Departmental cost worksheet summarizes for Payroll xx
each department the manufacturing cost per unit,
the units received and transferred out, the total *The amount charged to Factory Overhead for the
manufacturing costs, and the ending work in actual amount of indirect materials an arbitrary
process. amount chosen for this example to illustrate payroll
costs, such as the plant manager’s salary, that
could not be charged directly to any given
department as direct labor.
Company Name
Statement of Cost of Goods Manufactured 3. The entry to charge applied factory
overhead appearing on the cost production
For the Month Ended ---
summaries to the work in process accounts:

Materials xx
Labor xx Work in Process – Mixing xx
Factory Overhead xx Work in Process – Blending xx
Total xx Work in Process – Packaging xx
Add: Work in Process, beginning xx Factory Overhead – Mixing xx
Less: Work in Process, end xx Factory Overhead – Blending xx
Cost of Goods Manufactured xx Factory Overhead – Packaging xx

At the end of the month, the following journal 4. The entry summarizing several entries
entries are made: made in the general journal to reflect the
actual amount of the current month’s
provision for depreciation, insurance, payroll
 taxes, and other factory overhead Finished and transferred to Blending
expenses:
during the month xx
Factory Overhead xx Equivalent units of work in process,
Various Accounts xx
end of month xx
5. The entry to distribute the actual overhead Total Equivalent production xx
for the period to the individual departments:
Unit Cost for the month:
Factory Overhead – Mixing xx
Materials xx
Factory Overhead – Blending xx
Factory Overhead – Packaging xx Labor xx
Factory overhead xx
Factory Overhead xx
6. The departmental cost worksheet can be Total xx
used to develop the entries to record the
transfer of costs from one department to Inventory Costs:
another and to finished goods:
Cost of goods finished and transferred to
Work in Process – Mixing xx Blending during month xx
Work in Process – Blending xx Cost of work in process, end of month
Work in Process – Packaging xx
Materials xx
Work in Process – Blending xx
Finished goods xx Labor xx
Work in Process – Packaging xx Factory Overhead xx
Total Production Costs Accounted for xx
Cost of Production Summary – Multiple
Departments, Beginning Inventory
Company Name

Company Name Cost of Production Summary - Blending

Cost of Production Summary - Mixing For the Month Ended ---

For the Month Ended ---

Cost of Work in process, beginning of month:

Cost of Work in Process, beginning of month: Cost in Mixing xx

Materials xx Cost in Blending:

Labor xx Materials xx

Factory Overhead xx Labor xx

Cost of Production for the month: Factory Overhead xx

Materials xx Cost of goods received from Mixing

Labor xx During the month xx

Factory Overhead xx Cost of Production for month – Blending:

Total costs to be accounted for xx Materials xx

Unit Output for the month: Labor xx

 Factory Overhead xx Materials xx
Total Cost to be accounted for xx Labor xx

Unit Output for the month: Factory Overhead xx

Finished and transferred to Packaging
Cost of goods received from Blending
during the month xx
During the month xx
Equivalent units of work in process, Cost of Production for the month:
end of month xx Materials xx
Total Equivalent production xx Labor xx

Unit Cost for the month: Factory Overhead xx

Materials xx Total costs to be accounted for xx

Unit Output for the month:
Labor xx
Factory Overhead xx Finished and transferred to Finished

Total xx Goods during the month xx

Inventory Costs: Equivalent units of work in process,

Cost of goods finished and transferred end of month xx

to Packaging during the month Total Equivalent production xx

Cost in Mixing xx Unit Cost for the month:
Cost in Blending xx Materials xx
Cost of work in process, end of month Labor xx
Cost in Mixing xx
Factory Overhead xx
Cost in Blending
Total xx
Materials xx
Labor xx Inventory Costs;

Factory Overhead xx Cost of goods finished and transferred to

Total Production Costs Accounted for xx Finished goods during the month
Cost in Mixing xx

Company Name Cost in Blending xx

Cost of Production Summary - Packaging Cost in Packaging xx

For the Month Ended --- Cost of work in process, end of month:
Cost in Mixing xx
Cost of Work in process, beginning of month: Cost in Blending xx
Cost in Mixing xx Cost in Packaging:
Cost in Blending xx Materials xx
Cost in Packaging: Labor xx
 Factory Overhead xx Cost of Production for month – Blending:
Total Production costs accounted for xx Materials xx
Labor xx
Company Name Factory Overhead xx
Statement of Cost of Goods Manufactured Total Cost to be accounted for xx
For the Month Ended --- Unit Output for the month:
Finished and transferred to Packaging
Materials xx
Labor xx during the month xx
Factory Overhead xx Equivalent units of work in process,
Total xx
Add: Work in Process, beginning xx end of month xx
Less: Work in Process, end xx
Total Equivalent production xx
Cost of Goods Manufactured xx
Unit Cost for the month:
Cost from prior department:
Changes in Prior Department’s Unit Transfer Beginning Inventory xx
Cost
Transferred in this month xx
- The prior departments transfers from
two periods will often have unit costs Weighted average cost per unit xx
each month. Therefore, these Cost in Blending:
previous department costs must be
averaged as a separate grouping so Materials xx
that these transferred-in costs can
Labor xx
be properly allocated to the products
being produced in the department. Factory Overhead xx
Total Production costs accounted for xx
Company Name
Cost of Production Summary - Blending
For the Month Ended ---

Cost of Work in process, beginning of month:

Cost in Mixing xx
Cost in Blending:
Materials xx
Labor xx
Factory Overhead xx
Cost of goods received from Mixing
During the month xx
  BNORMAL LOSSES
- Unexpected losses in the manufacturing process and should not happen under a normal, efficient operating conditions.

CHAPTER 6
- Caused by machin e breakdowns due to inadequate maintenance and machine operator errors.
- Not included as part of the cost of transferred or finished goods, but are treated as Loss from Abnormal Spoilage - shown as a separate item of expense on the current income statement.
- Do not become part of the inventory costs transferred to subsequent departments, finished goods, and cost of goods sold.

Units Gained in Production

PROCESS AND COST ACCOUNTING –
ADDITIONAL PROCEDURES; ACCOUNTING - The addition of the materials in any department
FOR JOINT AND BY-PRODUCTS after the first department may increase the number
of units being processed.

Equivalent Production – Materials Not

Uniformly Applied Equivalent Production: FIFO METHOD
- Industries that use continuous production systems - This method assumes that the production work in
may put materials in varying quantities at different the current period is performed on a systematic
points of the processing cycle. basis.
- Before any manufacturing process can begin, 1. The beginning units of work in process are
some materials must be introduced in the first completed
production department.
2. Additional units are started and fully completed.
3. Other units are started the will remain unfinished
Materials Added at the Beginning of Process at the end of the period.
- Unit cost in mixing where all materials are added
at the beginning of the processing – WEIGHTED
AVERAGE COST METHOD Production work in the current period is performed
on a systematic basis.
- In mixing, because all materials are added at the
start of the processing, it is easy to determine the  FIFO differs from Weighted Average Cost
equivalent units of materials. Method only if there are units in process at
the start of the period. If no beginning work
- That is no matter where the Mixing department is in process, the two methods will yield the
in the production process, it is 100% complete as to same results.
materials.  First step in using FIFO or Weighted
Average is to list the costs that must be
accounted for.
Materials at the End of the Process - With FIFO, it is important to breakdown
the cost of the beginning work in
- Unit cost in the blending department where all process into its cost elements as the
materials are added at the close of processing is weighted average cost method requires.
computed using- WEIGHTED AVERAGE COST  Second step is to determine the unit output
METHOD for the month.
- Because the materials are added at the end of the - If there were units in process at the start
process in blending, costs will be applied only to of the period, the total equivalent
those units finished and transferred out of blending. production figures for the FIFO method
would be different that the other method
because the unit output required to
Materials Added at Different Stages of Process complete the beginning work in process
must be calculated under the FIFO
- Computed using the WEIGHTED AVERADE method.
COST METHOD
 Packaging- the calculation of equivalent production for materials is more difficult because they are added at different points throughou t the process
 The stage of completion of units in process cannot be averaged but must be reported in separate groups of units at various po in ts in the manufacturing operation as indicated in the production report.
 In calculating the unit cost to be assigned to the ending work in process, the stage of completion must be considered.
 the cost of production summaries have been prepared for each department the journal entries are then prepared.

Units Lost in Production

- Industries that have a process manufacturing operation, some units will always be lost due to evaporation, shrinkage, spillage, or other factors.

- The effect of such is that when the number of units still in process at the end of the period, the total units calculated will be less than the number of units that were initially placed into production.

 NORMAL LOSSES- are those expected in the manufacturing process and represent a necessary cost of producing the good units.
- These are treated as product costs; the cost of the lost units is included as a pa rt of the cost of all units finished or still in process because the good units could not have been produced without the normal spoilage.
- The good units absorb the cost of the units lost
- Effect is that the unit cost of the remaining units is greater than if no losses had occurred.
FIRST IN, FIRST OUT VS. WEIGHTED AVERAGE average method. Continuing with the example, if
IN PROCESS COSTING the total raw material costs under the weighted
average method are $1,250, then the equivalent
Process costing is the allocation of production costs
unit raw materials costs are about $7.14 ($1,250 /
to output units. The production process usually
175). If the conversion costs are $3,500, then the
involves multiple stages and business units. The
equivalent unit conversion cost is about $21.88
first-in first-out inventory valuation method assumes
($3,500 / 160). Therefore, the total equivalent unit
that the first items into inventory are the first items
cost is $29.02 ($7.14 + $21.88).
used in production. The weighted average cost is
equal to the total cost of all inventory items divided Under the FIFO method, the beginning work-in-
by the number of units. (Chirantan Basu) process raw materials and conversion costs are
excluded. If these were $250 and $1,000,
According to the Accounting for Management
respectively, then the equivalent unit costs are
website, the main difference between the FIFO and
about $6.45 [($1,250 - $250) / 155 = $1,000 / 155 =
weighted average method is in the treatment of
$6.45] and about $16.67 [($3,500 - $1,000) / 150 =
beginning work-in-process or unfinished goods
$2,500 / 150 = $16.67]. Therefore, the total
inventory. The weighted average method includes
equivalent unit cost using the FIFO method is
this inventory in computing process costs, while the
$23.12 ($6.45 + $16.67).
FIFO method keeps it separate.
Assigned Costs
Equivalent Units
The raw materials and conversion costs are
Costs for raw materials and conversions are
assigned to the completed and work-in-process
proportionately allocated to equivalent units, which
units. To conclude the example, under the weighted
include finished and unfinished goods. Conversion
average method, the completed unit cost is $2,902
costs include direct labor and factory overhead
(100 x $29.02), the work-in-process cost is about
costs. For example, if 100 units of ending work-in-
$1,848 [(75 x $7.14) + (60 x 21.88)] and the total
process inventory used 75 percent of the
cost is $4,750 ($2,902 + $1,848). In the FIFO
purchased raw materials and 60 percent of the
method, the completed unit cost is $2,312 (100 x
conversion costs, then the equivalent units for
$23.12), the work-in-process cost is $1,188 [(55 x
process costing purposes are 75 units (100 x 0.75)
$6.45) + (50 x 16.67)] and the total cost is $3,500
and 60 units (100 x 0.60), respectively. If 100
($2,312 + $1,188).
additional units were completed and shipped to
customers, then the equivalent units are 175 (100 + Joint product:
75) and 160 (100 + 60) for raw materials and
The products which are simultaneously produced
conversion costs, respectively.
using the same input, in a common process and
The beginning work-in-process inventory is each product carries considerably high sale value.
subtracted from the totals in the FIFO method. Also, none of the joint products can be recognized
Continuing with the example, if the beginning work- as the major product. The raw material is
in-process inventory consisted of 20 units, and it processed in order to produce more than two
includes 100 percent of raw materials and 50 products. A separation point called split-off point
percent conversion costs, then the equivalent units segregates the identity of the joint products from
are 20 (20 x 1.00) and 10 units (20 x 0.50), where they are either processed further or sold as
respectively. Therefore, the ending work-in-process they are.
inventory contains 55 (75 - 20) and 50 (60 - 10)
Suppose that a company is trying to process diesel
equivalent units for raw materials and conversion
and derives paraffin from the refinery processing.
costs, respectively. Therefore, using the FIFO
Here, both are joint products that are created with
method, the total equivalent units are 155 (100 +
intent and have their own market value. While the
55) and 150 (100 + 50), respectively.
process begins by using unrefined natural crude oil,
Equivalent Unit Cost the same is segregated into different sections to be
made into other fuels and products apart from
The beginning inventory costs and additional costs
diesel in the process of distillation. Post the split off
incurred in a period are combined in the weighted
point, individual processes take care of the
production of final joint products like paraffin etc.
By-product:
Any product that is the incidental result of the
process of production is called a by-product.
Derived from pre-existing material used to
manufacture the main products, a by-product has a
lower net realizable value as compared to the sale
value of main product since its occurrence is not a
priority but a consequence of the production
process. The by-product may be processed further
to increase its salable value, or be sold off at scrap
value depending on its usage.
Suppose that a company uses sugarcane to
produce sugar, then sugar is the main product and
molasses used to make paper and alcohol is a by-
product of the process. When the process begins to
crush sugarcane so as to derive the juice to
process, the crushed waste is simply of no value to
the sugar mill. Hence, this is sold off to paper mills
and alcohol distillery at scrap value without further
processing.
JOINT PRODUCT VS. BY-PRODUCT
The major points of difference between joint
product and by-product are given below:
1. Meaning:
A Joint product is one which is manufactured
ancillary to the production of the main production,
hence the purpose is intentional. However, a by-
product is purely an unintentional consequence of
the production of the main product.
2. Input:
Joint products are manufactured using raw
materials from the first step. By-products arise out
of the scrap of a given production process since
there is no intention to create a by-product.
3. Further processing:
After the split-off point, the joint products go
through their own further processing to be turned
into individual final products. By-products are
generally end resultants that are not processed
further and simply sold off to its concerned industry.
4. Economic value:
All the joint products are priced equally when it
comes to their economic value. They also share
production costs up to the split-off point, which is
called the joint cost, after which individual further
processing costs are added to the products. By-
products are sold at a lower net realizable value or
at scrap value.
The major points of difference between joint
product and by-product are given below:
1. Meaning:
A Joint product is one which is manufactured
ancillary to the production of the main production,
hence the purpose is intentional. However, a by-
product is purely an unintentional consequence of
the production of the main product.
2. Input:
Joint products are manufactured using raw
materials from the first step. By-products arise out
of the scrap of a given production process since
there is no intention to create a by-product.
3. Further processing:
After the split-off point, the joint products go
through their own further processing to be turned
into individual final products. By-products are
generally end resultants that are not processed
further and simply sold off to its concerned industry.
4. Economic value:
All the joint products are priced equally when it
comes to their economic value. They also share
production costs up to the split-off point, which is
called the joint cost, after which individual further
processing costs are added to the products. By-
products are sold at a lower net realizable value or
at scrap value.
5. Production:
A joint product is manufactured consciously and
simultaneously along with the main product,
whereas the by-product is simply an incidental
result of the manufacturing of the main product.
6. Usage:
The joint-products have independent uses of their
own in the market or may be used as ancillary
counterparts, but the by-products are not
contributory to the main product in any manner
whatsoever.