Relevant costs in a sell or process-further decision include
A) costs of additional processing.
B) both additional revenues and additional costs.
C) revenues after additional processing.
D) joint product costs.

Question

Quizplus · Accepted Answer

In a sell or process-further decision, choosing whether to sell a product at its current stage or to process it further depends on the additional revenues and costs associated with further processing. Relevant costs in this decision are the costs of additional processing and the additional revenues that will result from it. Therefore, the best choice is B, both additional revenues and additional costs. Joint product costs are not relevant in this decision as they have already been incurred and cannot be changed by further processing. Revenues after additional processing are also not relevant as they are a result of the decision, not a factor in making the decision.

Relevant Costs in a Sell or Process-Further Decision Include