In a sell or process further decision, consider the following costs:A variable production cost incurred prior to split-off.A variable production cost incurred after split-off.An avoidable fixed production cost incurred after split-off.Which of the above costs is (are) not relevant in a decision regarding whether the product should be processed further?
A) Only I
B) Only III
C) Only I and II
D) Only I and III

Question

Quizplus · Accepted Answer

Costs incurred prior to the split-off point are sunk costs and are not relevant to the decision of whether to process a product further. Costs incurred after the split-off point, whether variable or fixed (if avoidable), are relevant because they can be influenced by the decision.

In a Sell or Process Further Decision, Consider the Following