In a sell or process further decision, which of the following costs are not relevant
I. A variable production cost incurred after split-off.
II. A fixed production cost incurred prior to split-off.
A)Only I
B)Only II
C)Both I and II
D)Neither I nor II

Question

Quizplus · Accepted Answer

Only fixed production costs incurred prior to split-off are not relevant in the sell or process further decision. This is because these costs have already been incurred, regardless of the decision made, and cannot be changed by the decision. On the other hand, variable production costs incurred after split-off are relevant in the decision because they can be affected by the decision to process further or sell the product as is. Therefore, both I and II is not the correct answer.

In a Sell or Process Further Decision, Which of the Following