In a sell or process further decision,which of the following costs are relevant? I.A variable production cost incurred prior to the split-off point.
II.An avoidable fixed production cost incurred after the split-off point.
A)Only I.
B)Only II.
C)Both I and II.
D)Neither I nor II.

Question

Quizplus · Accepted Answer

An avoidable fixed production cost incurred after the split-off point is relevant because it can be eliminated if the product is not processed further. Variable production costs incurred prior to the split-off point are sunk costs and not relevant to the decision.

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