Product X-547 is one of the joint products in a joint manufacturing process. Management is considering whether to sell X-547 at the split-off point or to process X-547 further into Xylene. The following data have been gathered:Selling price of X-547Variable cost of processing X-547 into Xylene.The avoidable fixed costs of processing X-547 into Xylene.The selling price of Xylene.The joint cost of the process from which X-547 is produced.Which of the above items are relevant in a decision of whether to sell the X-547 as is or process it further into Xylene?
A) I, II, and IV.
B) I, II, III, and IV.
C) II, III, and V.
D) I, II, III, and V.

Question

Quizplus · Accepted Answer

- Selling price of X-547: relevant in determining the revenue earned by selling as is or processing further.
- Variable cost of processing X-547 into Xylene: relevant in determining the incremental cost of processing further.
- Avoidable fixed costs of processing X-547 into Xylene: relevant in determining the additional fixed costs incurred if processing further.
- Selling price of Xylene: relevant in determining the incremental revenue earned from processing further.
- Joint cost of the process from which X-547 is produced: sunk cost and not relevant in the decision of whether to sell X-547 as is or process further into Xylene.

Product X-547 Is One of the Joint Products in a Joint