In making decisions about whether to sell or further process joint products, allocation of common or joint costs is:
A)Essential.
B)Useful.
C)Irrelevant.
D)Is useful depending on the method chosen.
E)Is the only way to get the true total product cost.

Question

Quizplus · Accepted Answer

The allocation of common or joint costs is irrelevant in making decisions about whether to sell or further process joint products. The decision should be based on the incremental costs and benefits of further processing, not on the allocation of sunk costs.

In Making Decisions About Whether to Sell or Further Process