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
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
