Co-Product and By-Product in Orlansoft ERP Process Manufacturing

Jun 6, 2023

Joint Products are several products produced by a production process at the same time. The resulting products are in the form of Main Products and Co-Products. Meanwhile, by-products are products that are a by-product (minor) of the production process and have an immaterial income value.

Companies can use Joint Costing or By-Product Costing when the production process for several products is in the same process, and product separation is in the next stage. The split-off point is where the production process results in a separated product of the Main Product, Co-Product, or By-Product. Finished Goods may experience several split-off. Each split-off point can produce a Main Product, several Co-Products, and/or several By-Products.

The picture above illustrates the split point that produces Soy Milk and Soy Pulp (Okara). The Okara in the illustration above may be recognized as Co-Product or By-Product. The following is a comparison between By-Product vs. Co-Product in Orlansoft ERP:

No	By-Product	Co-Product
1	Item ID with item type = Material and option Co/By-Product = By-Product	Item ID with item type = Manufactured and option Co/By-Product = Co-Product
2	The By-Product sales value recognition is as other income. Sales Account = Other Income from By-Product.	The Co-Product sales value recognition is as Sales Revenue with the same GL Account as the Main Product (can be with a different GL Account). Sales Accounts = Gross Sales.
3	The By-Product unit cost may be the estimated selling price of the By-Product or other fair value.	The Co-Product Cost Ratio is a percentage of the total cost value of the Joint Product.
4	By-Product unit cost is a deduction value of the Main Product's cost in the roll-up standard cost menu. Value of stock on-hand By-Product = By-Product actual quantity x By-Product unit cost.	The value of the standard cost of the Co-Product is calculated simultaneously with the calculation of the Main Product cost in the Roll-up Standard Cost process. Value of Cost of Goods Manufactured Co-Product = Co-Product actual quantity x standard cost Co-Product.
5	No information on estimated qty By-Product is required. The Machine Operator end-user can manually enter the actual quantity result in the Machine Usage transaction.	The Estimated qty result of the Co-Product is in Production Order & Machine Usage transactions. The Machine Operator end-user can manually enter the actual quantity result in the Machine Usage transaction.
6	In the Cost Variance Analysis Report, By-Product is a deduction from the Main Product value in the Material Standard cost and Material Actual Cost columns.	The Cost Variance Analysis Report displays Co-Product at the cost ratio and the Main Product in the same report section.

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