Asked by Shavon Bashir on May 14, 2024
Verified
An avoidable fixed production cost incurred before the split-off point in a joint process is relevant in a sell or process further decision.
Split-off Point
The stage in a production process where joint products are identifiable or separable into individual products.
Avoidable Cost
An expense that can be eliminated if a particular decision is made, not incurred if a specific activity is discontinued.
Fixed Production Cost
The portion of total production costs that does not change with the level of output, including costs such as rent, salaries, and insurance.
- Understand the concepts of relevant and irrelevant costs in decision-making.
Verified Answer
DR
Daniela RamosMay 20, 2024
Final Answer :
False
Explanation :
Avoidable fixed production costs incurred before the split-off point are not relevant in a sell or process further decision because they are sunk costs and cannot be changed by the decision.
Learning Objectives
- Understand the concepts of relevant and irrelevant costs in decision-making.