Which of the following statements is true of sell-or-process-further decisions in joint costing?
A) Joint costs incurred before the split-off point are relevant in deciding whether to process the product further.
B) All separable costs in joint-cost allocations are incremental costs.
C) Separable costs incurred before the split-off point are irrelevant in deciding whether to process the product further.
D) Costs that differ between the alternatives of selling products or processing further are relevant.

Question

Quizplus · Accepted Answer

Costs that differ between the alternatives of selling products or processing further, such as additional processing costs, revenue from further processing and the price of the final product, are relevant in sell-or-process-further decisions. Separable costs incurred before the split-off point are also relevant if they are affected by the decision to process the product further, such as the cost of transporting or storing the product. However, joint costs incurred before the split-off point are sunk costs and are not relevant in this decision. All separable costs are not incremental costs, as some may remain the same regardless of the decision to process further or not.

Which of the Following Statements Is True of Sell-Or-Process-Further Decisions