In a sell or process further decision, which of the following costs is relevant? I. A variable production cost incurred after split-off.
II) A fixed production cost incurred prior to split-off.
A)Only I
B)Only II
C)Both I and II
D)Neither I nor II

Question

Quizplus · Accepted Answer

In a sell or process further decision, only the variable production cost incurred after split-off is relevant because it represents the additional cost that will be incurred if the product is processed further. The fixed production cost incurred prior to split-off is not relevant because it represents a sunk cost that has already been incurred and will not change regardless of the decision to sell or process further.

In a Sell or Process Further Decision, Which of the Following