Joint products should be processed beyond the split-off point if ________.
A) sale of the products are guaranteed
B) additional revenue from further processing exceeds additional expenses from further processing
C) additional revenue from further processing exceeds the joint costs
D) the marginal revenue of the joint products before the split-off point exceeds the marginal cost of the joint products

Question

Quizplus · Accepted Answer

Joint products should be processed beyond the split-off point only if the additional revenue from further processing exceeds the additional expenses from further processing. This is because the joint costs incurred up to the split-off point are sunk costs and should not be considered in the decision to continue processing. The decision to continue processing should be based on whether the additional revenue generated from the joint products beyond the split-off point exceeds the additional costs incurred in processing them. Therefore, option B is the correct choice.

Joint Products Should Be Processed Beyond the Split-Off Point If