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Right answer: Option A-Only I Explanation: Relevant costs are those that are incurred when a decision has been made and are thus relevant to that decision.In this case,costs incurred after the split off decision will only be relevant in this situation since they were incurred after the decision to split off.As a result, it is a relevant cost for selling or processing further decisions. Explanation for incorrect options: Option (A): Cost incurred before split cost is not relevant as it is sunk cost. Option (C): Statement I is correct whereas statement II is incorrect as the fixed production cost is considered as sunk cost. Option (D): Statement I is correct as variable production cost is the relevant cost for selling or processing further decisions but the statement II is incorrect. Recommended textbook solutions
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Cost Accounting: A Managerial Emphasis15th EditionCharles T. Horngren, Madhav V Rajan, Srikant M. Datar 853 solutions A)joint costs allocated to the productB)the selling price of the product at split-offC)the additional processing costs after split-offD)the selling price of the product after further processing Uploaded by: baongoccao Step-by-step answeroracinia pulvi Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel la molestie consequat, ultrices ac magna. Subscribe to view the full answerWhy Join Course Hero?Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.
Which of the following costs is not relevant to a decision to sell a product at splitJoint costs are irrelevant in decisions regarding what to do with a product from the split-off point forward. Therefore, these costs should not be allocated to end products for decision-making purposes.
Which of the following costs is not relevant to the decision to sell product at splitJoint costs are not relevant to the decision to sell a product at the split-off point or to process the product further.
Which of the following costs is not relevant to make or buy decision?The depreciation cost of $30,000 is not relevant since this cost will be incurred regardless of whether the firm chooses to make or buy a product.
Why are joint costs irrelevant in decision making?Joint costs are irrelevant because they will be the same, regardless of whether the products are sold or processed further, so joint costs should not be allocated among products.
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Which of the following costs is not relevant to a decision to sell a product at split off or to process the product further and then sell the product?
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