Joint costs incurred prior to the split- off point are not relevant in decisions regarding what to do from the split- off point forward.
When two things are purchased or produced simultaneously, joint costs are incurred. Joint costs share the same cost object, according to cost accounting terminology.
The expense incurred by producing several products at once is known as the joint cost. The expense involved in producing the joint products is that. Similar raw materials are used in the manufacture, however various product types are produced. The split-off point will be necessary before we can divide the shared cost.
A cost that benefits more than one product is referred to as a shared cost because it is impossible to determine how much money each product receives from the expense separately. A reliable system for distributing shared expenses among items must be developed by the accountant. At various stages of any manufacturing process, joint costs are probably to some extent to occur.
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