Output Types
The four output types in a production batch — how each is valued, how cost is allocated, and how they appear in inventory.
A single production batch can produce more than one type of output. A dairy processing a batch of milk might produce cream (the main product), skimmed milk (a co-product), and a small amount of residue (waste). Each output type is treated differently in terms of cost allocation and inventory impact. Getting output types right ensures that finished goods are valued correctly and that co-product inventory is accurately reported.
The Four Output Types
| Status | Meaning |
|---|---|
| Main | The primary intended output of the production process. At least one Main (or Co-Product) line must be defined on every cost card. Main receives its share of the joint cost by the allocation method, and its inventory account is debited on finalization at the allocated cost. Cost per unit of the main product is the headline metric for production efficiency. |
| Co-Product | A secondary saleable output produced alongside the main product as a result of the same process. A co-product has commercial value in its own right. It receives a share of the joint cost by the allocation method (By Sales Value, By Weight, or Manual %). Co-product inventory is added to the balance sheet at the allocated cost on finalization. |
| By-Product | An incidental output with lower value. By-products do not share the joint cost; instead their quantity × sell price is credited against it, so Main and Co-Products carry that much less. On finalization the by-product's inventory account is credited for that amount. |
| Waste | Unusable output that has no saleable value. No cost is allocated to Waste and it creates no stock and no journal line. The portion of inputs that becomes waste is absorbed, increasing the cost per unit of the saleable outputs. Tracking waste quantities over time is valuable for yield improvement analysis. |
How Cost Allocation Works Across Output Types
| Output Type | Participates in Cost Allocation? | Inventory Impact on Finalization | Revenue Treatment When Sold |
|---|---|---|---|
| Main | Yes — shares the net joint cost by the allocation method | Inventory account debited at allocated cost per unit | Revenue recognized against the item's Sales Account. COGS recognized from the item's cost at time of delivery. |
| Co-Product | Yes — shares the net joint cost by the allocation method | Inventory account debited at allocated cost per unit | Revenue recognized against the co-product item's Sales Account. Can be invoiced and delivered independently. |
| By-Product | No — its quantity × sell price is credited against the joint cost | Inventory account credited for the by-product credit | Revenue recognized against the item's Sales Account when sold. |
| Waste | No — never receives a cost allocation | No inventory impact — waste quantities are recorded for yield analysis only, not on the balance sheet | Not applicable — waste has no saleable value. |
Defining Outputs on a Cost Card
Each line in the Output Products section of a cost card specifies:
- Type — Main, Co-Product, By-Product, or Waste
- Product — the item this output corresponds to (only Material items, and Product or Material items marked Make, are offered)
- Qty — the expected quantity of this output from one batch
- Sell@ — the sell price used by the By Sales Value allocation and by the by-product credit
The Allocation (or Alloc % for Manual) and Cost/Unit columns update as you edit the lines.
Recording Actuals on a Production Batch
When running a batch, each output line is pre-filled from the cost card with an editable quantity. Enter the quantity actually produced:
- Main: the count of finished goods completed
- Co-Product: the count or weight of co-product produced
- By-Product: the count or weight of by-product recovered
- Waste: the quantity of unusable output generated
Even if waste has no accounting value (no cost allocated, no inventory entry), recording waste quantities on every batch creates a dataset for yield analysis. If a batch that should produce 500 units of main product at standard efficiency is producing 450 and generating 50 units of waste, that is a 10% waste rate that compounds across every future batch.
Example: Three-Output Batch
A beverage manufacturer runs a production batch for 1,000 bottles of premium juice (main). The process also produces 50 litres of pulp suitable for sale as animal feed (co-product) and generates 10kg of unusable residue (waste).
Joint cost: 2,000.00 (materials 1,600.00, labour 250.00, overhead 150.00).
Allocation method: By Sales Value. Premium juice sells at 3.00/bottle; pulp sells at 0.40/litre.
- Sales value of main: 1,000 × 3.00 = 3,000.00
- Sales value of co-product: 50 × 0.40 = 20.00
- Total eligible output value: 3,020.00
- Main cost allocation: 2,000.00 × (3,000 / 3,020) = 1,986.75 → 1.99 per bottle
- Co-product cost allocation: 2,000.00 × (20 / 3,020) = 13.25 → 0.27 per litre
- Waste receives: 0.00
The resulting inventory: 1,000 bottles of juice at 1.99 per unit, and 50 litres of pulp at 0.27 per unit — computed by the server on finalization.