Which of the Following Costs Is Irrelevant to a Decision

question 60

Multiple Choice

Which of the following costs is irrelevant to a decision to sell a product at split-off or process the product further and then sell the product?

• A)joint costs allocated to the product
• B)the selling price of the product at split-off
• C)the additional processing costs after split-off
• D)the selling price of the product after further processing

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Definitions:

Fixed Costs

Costs that do not vary with production or sales levels, including rent, insurance, and salaries, which remain constant regardless of business activity levels.

Operating Income

The profit realized from a business's operations, calculated by subtracting operating expenses from gross profit.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and insurance premiums.

Flexible Budget

A budget that adjusts or varies with changes in the volume of activity, providing a more useful tool for performance evaluation.