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

Name: At split-off, the joint costs of production for joint products are not relevant to the sell-or-process-further decision.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

At split-off, joint costs are sunk (already incurred) and cannot be changed by the sell-or-process-further decision. Therefore, they are not relevant to the decision-making process. Only incremental costs and revenues after split-off are relevant.

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