Answer
The number of products in a joint-cost situation can differ from the number of outputs because not all outputs have positive sales value. For example, in hydrocarbon processing, water is generated but not sold, and in mineral ore processing, dirt is generated but not sold; both are recycled or considered part of the process.
Work Step by Step
The number of products in a joint-cost situation may differ from the number of outputs because not all outputs necessarily have a positive sales value or are considered separate products. In some cases, certain outputs are simply part of the production process or are recycled without being sold as distinct products.
For example, in the offshore processing of hydrocarbons, the primary products are oil and gas, which have a positive sales value. However, water is also generated during the process, but it is typically recycled back into the ocean and doesn't have a sales value.
In the case of mineral ore processing to obtain gold and silver, the main products are the precious metals with sales value. Dirt generated during the process may also be an output, but it is typically recycled back into the ground and is not sold as a separate product.
So, the number of outputs in these examples exceeds the number of products because not all outputs are considered distinct, saleable products; some are simply part of the production process or are recycled.
