When deciding whether to sell a product at the split-off point or process it further, joint costs are not usually relevant because:
A) such amounts do not help to increase sales revenue.
B) such amounts only slightly increase a company's sales margin.
C) such amounts are sunk and do not change with the decision.
D) the sales revenue does not decrease to the extent that it should, if compared with separable processing.
E) such amounts reflect opportunity costs.

Question

Quizplus · Accepted Answer

Joint costs are considered sunk costs because they are incurred before the split-off point and do not change regardless of the decision to sell or process further.

When Deciding Whether to Sell a Product at the Split-Off