A product may be processed beyond the split-off point if management believes that
A)its marketability will be enhanced.
B)the incremental cost of further processing will be less than the incremental revenue of further processing.
C)the joint cost assigned to it is not already greater than its prospective selling price.
D)both a and b.

Question

Quizplus · Accepted Answer

Management may decide to process a product beyond the split-off point if they believe that its marketability will be enhanced and if the incremental cost of further processing will be less than the incremental revenue of further processing. This choice allows for the best combination of potential marketability and financial benefits. However, it is also important to consider if the joint cost assigned to the product is not already greater than its prospective selling price, as processing beyond this point may result in a loss.

A Product May Be Processed Beyond the Split-Off Point If