Joint (common) costs in a joint production process are relevant for determining:
A) Whether to produce at all.
B) Which products should be produced up to the split-off point in the production process.
C) Which products should be produced internally and which products should be outsourced.
D) The set of products that should be subjected to additional processing.
E) The selling price of individual products produced as part of the joint production process.

Question

Quizplus · Accepted Answer

Joint (common) costs are sunk costs and are not relevant for decisions that affect the future such as which products to produce, outsource, or process further. They are relevant for the initial decision of whether to undertake the joint production process at all.

Joint (Common) Costs in a Joint Production Process Are Relevant