Which of the following costs is (are) relevant with respect to the decision to sell a product at the split-
Off point or to process if further?
I. The variable costs of further processing the product.
II. The joint processing costs associated with the manufacture of the product.
III. The increase in the sales price of the product if it is further processed.

Question

Quizplus · Accepted Answer

The relevant costs for the decision to sell a product at the split-off point or to process it further include the variable costs of further processing (I) and the increase in the sales price of the product if it is further processed (III). Joint processing costs (II) are sunk costs and not relevant to this decision because they are incurred regardless of the decision.

Which of the Following Costs Is (Are) Relevant with Respect