The Decision of Whether or NOT to Process Joint Products

question 65

Multiple Choice

The decision of whether or NOT to process joint products beyond their split-off point is

• A)based on the total cost of the finished product including joint costs.
• B)based on joint costs only.
• C)based on selling price at split-off point.
• D)based on additional revenues versus additional costs of processing further.

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Definitions:

Market Clearing Level

The price and quantity at which supply equals demand, so there is no surplus or shortage in the market.

Surplus

Situation in which the quantity supplied exceeds the quantity demanded.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where supply equals demand.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a specific price over a given period of time.