Asked by Myrana Exantus on Mar 10, 2024



In a sell or process further decision, consider the following costs:A variable production cost incurred prior to split-off.A variable production cost incurred after split-off.An avoidable fixed production cost incurred after split-off.Which of the above costs is (are) not relevant in a decision regarding whether the product should be processed further?

A) Only I
B) Only III
C) Only I and II
D) Only I and III

Variable Production Cost

Charges that fluctuate in line with production levels, such as direct labor and materials used.


A point in the production process where multiple products are derived from a common input, and separate paths of further processing or sale are identified.

Avoidable Fixed Production Cost

Fixed costs that can be eliminated if a particular product, service, or segment is discontinued.

  • Utilize the principles of joint costs and the decision-making procedure for joint products.
  • Familiarize oneself with the concepts of sunk costs, opportunity costs, and avoidable costs and their relevance to financial decision-making.

Verified Answer

Chelsea Hughes

Mar 10, 2024

Final Answer :
Explanation :
Costs incurred prior to the split-off point are sunk costs and are not relevant to the decision of whether to process a product further. Costs incurred after the split-off point, whether variable or fixed (if avoidable), are relevant because they can be influenced by the decision.