During the course of manufacturing a product that the company sells to its customers, there are often additional products that are created in the process. Some of these additional products are of significant financial value and therefore desirable to the company. The company can sell such additional products as standalone products, or even use them in other production processes. Additional products with significant financial value are known as co-products. Undesirable or low-value additional products produced in the manufacturing process are known as by-products. Both of these products are inventory-managed in the system. Co-products and by-products differ from scrap, in that scrap is charged off to the cost of production and is not inventory-managed.
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