Since the costs of producing an intermediate product do not change regardless of whether the intermediate product is sold or processed further, these costs are not considered in deciding whether to further process a product.

Question

Quizplus · Accepted Answer

The statement is true. These costs are known as sunk costs and are not relevant in the decision-making process. The decision to further process the product should be based on the incremental cost and revenue associated with the additional processing.

Since the Costs of Producing an Intermediate Product Do Not