Question

Stahl Inc. produces three separate products from a common process costing $100,000. Each of the products can be sold at the split-off point or can be processed further and then sold for a higher price. Shown below are cost and selling price data for a recent period. Sales Value at Split-Off Point Cost to Process Further Sales Value after Further Processing Product 10 $60,000 $100,000 $190,000 Product 12 15,000 30,000 35,000 Product 14 55,000 150,000 215,000

Your answer is incorrect. Try again. Determine total net income if all products are sold at the split-off point. Net income $ LINK TO TEXT

Your answer is incorrect. Try again. Determine total net income if all products are sold after further processing. Net income $ LINK TO TEXT

Your answer is partially correct. Try again. Calculate incremental profit/(loss) and determine which products should be sold at the split-off point and which should be processed further. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Product Incremental profit (loss) Decision Product 10 $ Should be processed furtherShould be sold at the split-off point Product 12 $ Should be sold at the split-off pointShould be processed further Product 14 $ Should be sold at the split-off pointShould be processed further LINK TO TEXT

Your answer is partially correct. Try again. Determine total net income using the results from previous part. Net income $ Is the net income different from that determined in part (b)? YesNo , net income is lowerhigher by $

Answer 1

solution a:
Computation of net Income if all products sold at split off point
	Product 10	Product 12	Product 14	Total
Sale value at Split off point	$60,000	$15,000	$55,000	$1,30,000
Less : common process cost				$1,00,000
Total Net income				$30,000

Solution b:
Computation of net Income if all products sold after further process
	Product 10	Product 12	Product 14	Total
sale value after further processed	$1,90,000	$35,000	$2,15,000	$4,40,000
Less : cost to process further	$1,00,000	$30,000	$1,50,000	$2,80,000
Less : common process cost				$1,00,000
Total Net income				$60,000

Solution c:
Computation of Incremental Profit (Loss) and taking decision
	Product 10	Product 12	Product 14	Total
Sale value after further processed	$1,90,000	$35,000	$2,15,000	$4,40,000
Less : cost to process further	$1,00,000	$30,000	$1,50,000	$2,80,000
Less: Sales Value at split off point	$60,000	$15,000	$55,000	$1,30,000
Incremental Profit/ (Loss)	$30,000	-$10,000	$10,000	$30,000
Decision	Process Further	Sell at split off point	Process Further

solution d:
Computation of net Income as per decision
	Product 10	Product 12	Product 14	Total
Sale value as per decision	$1,90,000	$15,000	$2,15,000	$4,20,000
Less : cost to process further	$1,00,000		$1,50,000	$2,50,000
Less : common process cost				$1,00,000
Total Net income				$70,000

Yes, net income is increasing by ($70000 -$60000=) $10,000