# Accounting Assignment Help With By-Product Costing

## 7.4 By-product costing

Practically speaking by-products are not costed. They are of insignificant value as compared to the main product(s). Value of by-products is deducted from the joint cost to arrive at the cost of main products.

Let us see the product costing structure

Input 20,000

Units

Total cost \$ 100,000

Less: By product value \$ 4,000

Cost of main product \$96,000

Cost per unit of main product is \$ 6.

Sometimes by-products are also processed further. In that situation Reverse cost method is followed for by-product costing. This method suggests deducting separate cost, selling and distribution cost and reasonable profit to arrive at the cost of by-product at the time of split off point.

Continuing with the example given above, let us suppose B is sold for 16,000, separation processing cost is \$ 8,000 and per unit packaging cost is \$ 3. A profit of 10% is expected on cost. Applying reverse cost method, cost of by-product may be arrived at as follows.

Sales \$ 16,000

Separate process cost \$ 8,000

Selling cost \$ 3,000

\$ 11,000

Profit \$ 1,100 \$ 12,100

Cost of by-product B at \$ 3,900

Split off point

So, the joint cost is apportioned between M and B as follows.

### Email Based Assignment Help in By-Product Costing

To Schedule a Accounting By-Product Costing tutoring session

### Following are some of the topics in Process Cost Analysis in which we provide help:

Accounting Assignment Help | Accounting Homework help | Help with Accounting | Management Accounting | Cost Accounting | Online Tutoring | Financial Accounting | Email Based Accounting Homework Help