The decision of whether to process products beyond the splitoff process should be based on which of the following?
A)revenue analysis
B)relevant cost analysis
C)production cost analysis
D)gross margin analysis
E)incremental operating income attainable beyond the splitoff point

Question

Quizplus · Accepted Answer

The decision of whether to process products beyond the splitoff process should be based on incremental operating income attainable beyond the splitoff point. This means that the additional income generated by processing products beyond the splitoff point should be compared to the additional costs incurred in processing those products. This analysis will determine whether or not it is economically feasible to process products beyond the splitoff point. Choices A, B, C, and D are all factors that may be considered in the decision-making process, but the primary driver should be the incremental operating income attainable beyond the splitoff point.

The Decision of Whether to Process Products Beyond the Splitoff