Discuss the treatment of By-products in cost accounting. OR Define Job costing and explain differences between job and batch Costing.

By-product cost can be dealt in cost accounting in the following ways: (i) When they are of small total value: When the by-products are of small total value, the amount realised from their sale may be dealt in any one the following two ways: 1. The sales value of the by-products may be credited to the Costing Profit and Loss Account and no credit be given in the Cost Accounts. The credit to the Costing Profit and Loss Account here is treated either as miscellaneous income or as additional sales revenue. 2. The sale proceeds of the by-product may be treated as deductions from the total costs. The sale proceeds in fact should be deducted either from the production cost or from the cost of sales. (ii) When the by-products are of considerable total value: Where by-products are of considerable total value, they may be regarded as joint products rather than as by-products. To determine exact cost of by-products the costs incurred upto the point of separation, should be apportioned over by-products and joint products by using a logical basis. In this case, the joint costs may be divided over joint products and by-products by using relative market values; physical output method (at the point of split off) or ultimate selling prices (if sold). (iii) Where they require further processing: In this case, the net realisable value of the by-product at the split-off point may be arrived at by subtracting the further processing cost from the realisable value of by-products. If total sales value of by-products at split-off point is small, it may be treated as per the provisions discussed above under (i). In the contrary case, the amount realised from the sale of by-products will be considerable and thus it may be treated as discussed under (ii). OR Job Costing is defined as "the category of basic costing methods which is applicable where the work consists of separate contracts, jobs or batches, each of which is authorised by specific order or contract.” According to this method, costs are collected and accumulated according to jobs, contracts, products or work orders. Each job or unit of production is treated as a separate entity for the purpose of costing. Difference between job and batch costing Sr. No. Job Costing Batch Costing 1. Method of costing used for non- standard and non- repetitive products produced as per customer specifications and against specific orders. Homogeneous products produced in a continuous production flow in lots. 2. Cost determined for each Job Cost determined in aggregate for the entire Batch and then arrived at on per unit basis. 3. Jobs are different from each other and independent of each other. Each Job is unique. Products produced in a batch are homogeneous and lack of individuality