## Joint Products
When a single production process produces two or more main products (joint products) and the cost of conversion for each cannot be separately identified:
Allocate joint conversion cost in the ratio of sales value.
$$\text{Sales Value of each product} = \text{Units produced} \times \text{Selling price per unit}$$
Then allocate total joint cost in the ratio of these sales values.
## By-Products
By-products are immaterial, incidental outputs from the production of main products (e.g., buttermilk and butter fat from butter production, scrap from manufacturing).
### Treatment Steps:
1. Measure by-product at NRV (estimated selling price − selling costs)
2. Deduct NRV of by-product from total cost of conversion
3. Allocate the net (reduced) joint cost to the main products in their sales value ratio
### Key Rule:
> If the question gives profit from the by-product, ignore profit — use only NRV. The NRV (not profit) is deducted from conversion cost.