What is the difference between co-products and by-products?

The distinction between co-products and by-products is essential in production planning as it relates to how they are treated within a manufacturing process. Co-products are defined as products that are produced simultaneously and have significant economic value, while by-products are secondary products generated during the manufacturing process, often having lesser economic significance.

The correct choice states that only co-products appear in the production order settlement rule. This is accurate because co-products are included in the cost calculation of the main product, and their value is managed within the parameters of the production order. In contrast, by-products typically do not get the same level of focus in settlement processes because they are not the primary product of the operation.

Co-products often require specific tracking and management, particularly when it comes to inventory valuation and profitability analysis, which reflects why they are incorporated in settlement rules while by-products may not have the same kind of treatment. By-products, when they do appear in production orders, often do so with different accounting or valuation approaches, reflecting their ancillary nature in the production process.

Thus, the choice accurately reflects the management of co-products in the context of production order settlement, which is fundamental for understanding their role within SAP Production Planning and Manufacturing processes.