"Managers should consider only additional revenues and separable costs when making decisions about selling at splitoff or processing further." Do you agree? Explain.

Answer:

Yes , Managers should consider only additional revenues and separable costs when making decisions about selling at splitoff or processing further because Relevant Cost would be the Differnetial Cost or Incremental Cost to current Cost i.e seperable cost and Relevant income would be net incremental revenue i.e additional revenues. So by taking both we get Net Incremental profit or loss, if there would be Net Incremental profit than we should be processing further and if here would not be Net Incremental profit than we should sell at the split off point time. This approach is the incremental or differential approach.