A main product is a
joint output that generates a significant portion of the
net realizable value
Net realizable value (NRV) is a measure of a fixed or current asset's worth when held in inventory, in the field of accounting. NRV is part of the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS ...
(NRV) within a
joint production process In Economics, joint product is a product that results jointly with other products from processing a common input; this common process is also called joint production.Wouters, Mark; Selto, Frank H.; Hilton, Ronald W.; Maher, Michael W. (2012): ''Cost ...
. The classification of a product resulting from a joint production process as either a main product or a
by-product
A by-product or byproduct is a secondary product derived from a production process, manufacturing process or chemical reaction; it is not the primary product or service being produced.
A by-product can be useful and marketable or it can be consid ...
has relevance in the context of
cost management
Cost accounting is defined as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includes methods for recognizing, classifying, al ...
because costs are only allocated to main products, not to by-products.
[Wouters, Mark; Selto, Frank H.; Hilton, Ronald W.; Maher, Michael W. (2012): ''Cost Management: Strategies for Business Decisions'', International Edition, McGraw-Hill, p. 538.]
References
{{reflist
Product