Question

In a sell or process further decision, which of the following costs are relevant?

I. A variable production cost incurred prior to the split-off point.
II. An avoidable fixed production cost incurred after the split-off point.

Answer 1

Answer: Only II

Step-by-step explanation:

The sell or process further decision is the choice of selling a product at the present time or processing it further in order to earn additional revenue. When two or more products are generated by a manufacturing process is when the sell or process further decision arises. When doing this there is an avoidable fixed production cost that incurred after the split-off point.