In the sell-or-process-further decision,a. joint costs are always relevant.b. total costs of joint processing and further processing are relevant.c. all costs incurred prior to the split-off point are relevant.d. the most profitable outcome may be to further process some separately identifiable products beyond the split-off point, but sell others at the split-off point.e. None of these

In the sell-or-process-further decision,a. joint costs are always relevant.b. total costs of joint processing and further processing are relevant.c. all costs incurred prior to the split-off point are relevant.d. the most profitable outcome may be to further process some separately identifiable products beyond the split-off point, but sell others at the split-off point.e. None of these

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 12DQ: If the minimum transfer price of the selling division is less than the maximum transfer price of the...

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If the minimum transfer price of the selling division is less than the maximum transfer price of the buying division, the intermediate product should be transferred internally. Do you agree or disagree? Why?
Which of the following statements is true? An avoidable fixed production cost incurred before the split-off point in a joint process is relevant in a sell or process further decision. It is profitable to continue processing joint products after the split-off point if their total revenues exceed the joint costs. Which of the following statements is true? Consistency demands that a cost that is relevant in one decision be regarded as relevant in other decisions as well. Variable costs are always relevant costs in decisions.
In which scenario would an adjusted sales value be used to assign costs? a. If abnormal losses occur during production of joint products b. If a joint product is to be processed further after the point of separation c. If one of the joint products has negligible market value d. If joint products are separately identifiable before split-off point
Are allocated joint processing costs relevant when making a decision to sell a joint product at the split-off point or process it further? Why?
Briefly describe the treatment of Joint Costs when making a sell-or-process-further decision. What is the decision rule in deciding whether to sell a product or process it further?
Products G and H are joint products developed from the same process with each being processed further. Joint costs are incurred until split-off, the separable costs are incurred in further refining each product. Sales values of G and H at split-off are used to allocate joint costs. If the sales value of G at split-off increases and all other costs and selling prices remain unchanged, the gross margin of A. G- decreases while H increases B. G- increases while H decreases C. G- increases and H increases D. G- decreases and H decreases
[CPA Adapted] For purposes of allocating joint costs to joint products, the sales value at splitoff method could be used in which of the following situations? No costs Cost beyond beyond splitoff splitoff a. Yes No b. Yes No c. No Yes d. No Yes
ABC Co.,is analyzing whether to expand operations by adding a new product line. Which of the following choices correctly identifies the costs that should be considered in this decision? none of the costs noted opportunity costs only sunk costs only
A decision that involves potential further processing of joint products is which kind of decision? relevant make-or-buy sell-or-process-further special-order keep-or-drop
“ Managers must decide whether a product should be sold at splitoff or processed furthur.The sales value at splitoff method of joint-cost allocation is the best method for generating the information managers need for this decision.”Do you agree? Explain.
What is the financial advantage (disadvantage) of further processing each of the three products beyondthe split-off point?
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