At split-off, the joint costs of production for joint products are NOT relevant to the sell-or-process-further decision.

Question

Quizplus · Accepted Answer

The joint costs incurred up to the split-off point are sunk costs and are not relevant to the sell-or-process-further decision. The decision should be based on the incremental revenues and costs that will be incurred beyond the split-off point for each product.

At Split-Off, the Joint Costs of Production for Joint Products