Definition:
A by-product is a secondary or incidental product that is produced during the manufacturing process of another product. It’s often a byproduct of the main product and may have value or be considered waste.
Key characteristics of by-products:
- Secondary product: By-products are not the primary product of a manufacturing process.
- Value: By-products may have value and can be sold or used in other production processes.
- Waste: If a by-product has no value, it may be considered waste and disposed of.
- Accounting treatment: The accounting treatment for by-products can vary depending on their value and the nature of the manufacturing process.
Why are by-products important?
- Revenue generation: By-products can be a source of additional revenue for a company.
- Cost reduction: By-products can help to reduce the overall cost of production by utilizing materials that would otherwise be wasted.
- Sustainability: By-products can be used to create more sustainable products and reduce waste.
In essence, a by-product is a secondary or incidental product that is produced during the manufacturing process of another product, and it can have value or be considered waste.
