Accounting › Section W · Short-term decision making › Topic W.5
Sell or process further
Many products can be sold as they are or worked on further and sold for more. Whether the extra work pays depends only on what it adds, never on what was spent to get the product this far.
In this topic
- When to stop processing
- Joint products and the split-off point
- Why joint costs are irrelevant here
- The decision rule
- Worked example: butter at Vellacott Dairy
- Allocating joint costs for the accounts
- Worked example: an allocation that misleads
- Other factors to weigh
- Common mistakes to avoid
- Key takeaways
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