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A by-product may be developed into a main product. Some manufacturers choose not to develop a by-product into a main product due to the lack of facilities, cost, lack of fit with other main products, etc. However, this does not preclude others from taking the by-product and developing it into a salable finished product (for example, sawdust and wood chips manufactured into particle board).
This is the correct reason for treating a product generated from a joint process as a by-product.
This alternative is incorrect because the physical volume of the by-product may be significant.
This alternative is incorrect because it describes scrap, whereas a by-product provides sales value to the manufacturer.