Production of all the joint products should cease if
A)any of the individual joint products sells for less than its allocated cost.
B)the total joint cost is less than the total revenue generated when all of the joint products are sold.
C)any of the joint products have a negative gross margin after the joint costs have been allocated.
D)total revenue from the sale of all the joint products is less than the joint cost.

Question

Quizplus · Accepted Answer

The correct decision to cease production of all joint products should be based on the comparison of total revenue from all joint products against the total joint cost. If the total revenue is less than the joint cost, it indicates that the production is not covering the costs, making it financially unviable to continue. Choices A and C focus on individual products rather than the overall profitability, and B describes a scenario where production should continue, not cease.

Production of All the Joint Products Should Cease If