Definition of Joint product

Joint product

A product that has the highest sales value from among a group of products
that are the result of a joint production process.

approximated net realizable value at split-off allocation

a method of allocating joint cost to joint products using a
simulated net realizable value at the split-off point; approximated
value is computed as final sales price minus
incremental separate costs

incremental separate cost

the cost that is incurred for each
joint product between the split-off point and the point of sale

joint process

a manufacturing process that simultaneously
produces more than one product line
joint product one of the primary outputs of a joint process;
each joint product individually has substantial revenuegenerating
ability

net realizable value approach

a method of accounting for by-products or scrap that requires that the net realizable value of these products be treated as a reduction in the cost of the primary products; primary product cost may be reduced by decreasing either
(1) cost of goods sold when the joint products are sold or
(2) the joint process cost allocated to the joint products

net realizable value at split-off allocation

a method of allocating joint cost to joint products that uses, as the proration base, sales value at split-off minus all costs necessary
to prepare and dispose of the products; it requires
that all joint products be salable at the split-off point

sales value at split-off allocation

a method of assigning joint cost to joint products that uses the relative sales values of the products at the split-off point as the proration basis; use of this method requires that all joint products
are salable at the split-off point

Aggregate Production Function

An equation determining aggregate output as a function of aggregate inputs such as labor and capital.

by-product

an incidental output of a joint process; it is salable,
but the sales value of by-products is not substantial enough
for management to justify undertaking the joint process; it
is viewed as having a higher sales value than scrap

By-product

A product that is an ancillary part of the primary production process, having
a minor resale value in comparison to the value of the primary product being
manufactured. Any proceeds from the sale of a by-product are typically offset
against the cost of the primary product, or recorded as miscellaneous revenue.

By-product

A material created incidental to a production process, which can be
sold for value.

cost of production report

a process costing document that
details all operating and cost information, shows the computation
of cost per equivalent unit, and indicates cost assignment
to goods produced during the period

economic production run (EPR)

an estimate of the number
of units to produce at one time that minimizes the total
costs of setting up production runs and carrying inventory

equivalent units of production (EUP)

an approximation of the number of whole units of output that could have been
produced during a period from the actual effort expended
during that period; used in process costing systems to assign
costs to production

Factor of Production

A resource used to produce a good or service. The main macroeconomic factors of production are capital and labor.

grade (of product or service)

the addition or removal of product
or service characteristics to satisfy additional needs, especially price

Gross Domestic Product

Total output of final goods and services produced within a country during a year.

Gross domestic product (GDP)

The market value of goods and services produced over time including the
income of foreign corporations and foreign residents working in the U.S., but excluding the income of U.S.
residents and corporations overseas.

Gross National Product

Total output of final goods and services produced by a country's citizens during a year.

Gross national product (GNP)

Measures and economy's total income. It is equal to GDP plus the income
abroad accruing to domestic residents minus income generated in domestic market accruing to non-residents.

Investment product line (IPML)

The line of required returns for investment projects as a function of beta
(nondiversifiable risk).

Joint account

An agreement between two or more firms to share risk and financing responsibility in
purchasing or underwriting securities.

Joint clearing members

Firms that clear on more than one exchange.

joint cost

the total of all costs (direct material, direct labor,
and overhead) incurred in a joint process up to the splitoff point

Joint cost

The cost of a production process that creates more than one product at the
same time.

Joint Policy Life

One insurance policy that covers two lives, and generally provides for payment at the time of the first insured's death. It could also be structured to pay on second death basis for estate planning purposes.

Lean production

The technique of stripping all non-value-added activities from
the production process, thereby using the minimum possible amount of resources
to accomplish manufacturing goals.

National Income and Product Accounts

The national accounting system that records economic activity such as GDP and related measures.

Net Domestic Product

GDP minus depreciation.

Net National Product

GNP minus depreciation.

Non-production overhead

A general term referring to period costs, such as selling, administration and financial expenses.

Process flow production

A production configuration in which products are continually
manufactured with minimal pauses or queuing.

process productivity

the total units produced during a period
using value-added processing time

Product

Any item intended for sale.

product complexity

an assessment about the number of components in a product

product contribution margin

the difference between selling price and variable cost of goods sold

Product cost

The cost of goods or services produced.

product cost

This is a key factor in the profit model of a business. product
cost is the same as purchase cost for a retailer or wholesaler (distributor).
A manufacturer has to accumulate three different types of production
costs to determine product cost: direct materials, direct labor, and
manufacturing overhead. The cost of products (goods) sold is deducted
from sales revenue to determine gross margin (also called gross profit),
which is the first profit line reported in an external income statement
and in an internal profit report to managers.

product cost

a cost associated with making or acquiring inventory

Product cost

The total of all costs assigned to a product, typically including direct
labor, materials (with normal spoilage included), and overhead.

Product cycle

The time it takes to bring new and/or improved products to market.

product life cycle

a model depicting the stages through
which a product class (not necessarily each product) passes

product line margin

see segment margin

Product market

A business’s investment in technology, people and materials in order to make, buy and sell products or services to customers.

product- (or process-) level cost

a cost that is caused by the development, production, or acquisition of specific products or services

Product risk

A type of mortgage-pipeline risk that occurs when a lender has an unusual loan in production or
inventory but does not have a sale commitment at a prearranged price.

Product/service mix

See sales mix.

product variety

the number of different types of products
produced (or services rendered) by a firm

Production-flow commitment

An agreement by the loan purchaser to allow the monthly loan quota to be
delivered in batches.

Production overhead

A general term referring to indirect costs.

Production payment financing

A method of nonrecourse asset-based financing in which a specified
percentage of revenue realized from the sale of the project's output is used to pay debt service.

Production yield variance

The difference between the actual and budgeted proportions
of product resulting from a production process, multiplied by the standard unit cost.

productive capacity

the number of total units that could be
produced during a period based on available equipment time
productive processing time the proportion of total time that
is value-added time; also known as manufacturing cycle
efficiency

Productivity

Output per unit of input, usually measured as output per hour of labor.

Sales Revenue Revenue recognized from the sales of products as opposed to the provision of

services.

UNITS OF PRODUCTION

A depreciation method that relates a machine’s depreciation to the number of units it makes each
accounting period. The method requires that someone record the machine’s output each year.

physical measurement allocation

a method of allocating a joint cost to products that uses a common physical characteristic as the proration base

Sales value at split-off

A cost allocation methodology that allocates joint costs to joint
products in proportion to their relative sales values at the split-off point.

scrap

an incidental output of a joint process; it is salable but
the sales value from scrap is not enough for management
to justify undertaking the joint process; it is viewed as having
a lower sales value than a by-product; leftover material
that has a minimal but distinguishable disposal value

split-off point

the point at which the outputs of a joint process are first identifiable or can be separated as individual products

Split-off point

The point in a production process when clearly identifiable joint costs
can be identified within the process.

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