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Split-off point

The split-off point is the stage at which outputs from a joint process become separately identifiable. Costs before it are joint costs; costs incurred specifically for an output afterwards are separable costs. It defines the starting point for comparing sale-at-split-off with further-processing alternatives. Reporting may allocate joint costs to the outputs, but that allocation is separate from measuring the incremental benefit of later processing.

Worked example

A and B separate after a common refining stage. A can be sold then for $8,000 or processed further for $2,000 and sold for $11,000, giving $1,000 extra profit.

Common mistake

Do not compare further-processing revenue alone with total product cost; compare the change in revenue with the additional processing cost.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA MA Direct September 2026–June 2027
FIA FMA Direct September 2026–June 2027