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.