Joint products should be processed beyond the split-off point if ________.
A)incremental expenses from further processing exceed incremental revenues from further processing
B)sale of the product is guaranteed
C)additional revenue from further processing exceeds additional expenses from further processing
D)the marginal cost of the joint product exceeds the marginal revenue

Question

Quizplus · Accepted Answer

Joint products should be processed beyond the split-off point if the additional revenue from further processing exceeds the additional expenses from further processing. This is because any additional revenue earned from further processing will increase profitability, as long as the additional expenses are not greater than the additional revenue. Therefore, option C is the correct choice. Option A is incorrect because it focuses only on incremental expenses and ignores incremental revenue. Option B is incorrect because a guaranteed sale does not necessarily mean that further processing will be profitable. Option D is incorrect because it suggests that the marginal cost of producing the joint product should be greater than the marginal revenue, which is not a profitable outcome.

Joint Products Should Be Processed Beyond the Split-Off Point If