Heartland Fabrication offers several carbon, steel, and aluminum products. In a new initiative, Heartland has committed to using 90% of the residual product (byproducts and waste) as raw materials for other applications or to be sold.

To do this, the costs of byproducts must be accumulated and then allocated to each product, whether used again as raw material or sold. The accounting department is researching several ways to track these costs, which will either become raw material costs for further production or cost of goods sold (if sold and not reprocessed).

• Explain the difference between joint products and byproducts.
• If you were in charge of the cost accounting department, suggest what methods might be available to Heartland in tracking these byproduct costs.
• What qualitative issues does Heartland need to consider in reusing or selling byproducts?