In deciding whether to sell a product 'as is' or process it further,which of the following costs are relevant to the decision?

Question

Quizplus · Accepted Answer

The costs incurred to process further are relevant because they represent the additional costs necessary to create a higher valued product. The costs incurred up to the decision point are sunk costs and cannot be recovered. Overhead costs and direct materials and labour costs do not provide relevant information for this particular decision.

In Deciding Whether to Sell a Product 'As Is' or Process