Question

Stahl Inc. produces three separate products from a common process costing $100,900. 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			$59,300				$100,400				$189,600
Product 12			15,900				29,100				34,800
Product 14			54,500				149,900				214,400

Determine total net income if all products are sold at the split-off point.

Net income

$Type your answer here

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Determine total net income if all products are sold after further processing.

Net income

$Type your answer here

eTextbook and Media

  

  

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 sold at the split-off pointShould be processed further
Product 12		$		Should be processed furtherShould be sold at the split-off point
Product 14		$		Should be processed furtherShould be sold at the split-off point

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Determine total net income using the results from previous part.

Net income

$

Is the net income different from that determined in part (b)?

NoYes, net income is                                                                       higherlower by $

Answer 1

	Particulars	Amount (in $)
	Product 10	$ 59,300
	Product 12	$ 15,900
	Product 14	$ 54,900
	Total	$ 129,700
	Less: Common Process costs	($ 100,900)
	Total Net income if Products are sold at Split off Point	$ 28,800
	Particulars	Amount (in $)
	Product 10	$ 189,600
	Product 12	$ 34,800
	Product 14	$ 214,400
	Total	$ 438,800
	Less: Cost of Further Processing              ( $ 100,400 + $ 29,100 + $ 149,900)	($ 279,400)
	Less: Common Process costs	($ 100,900)
	Total Net income if Products are sold after Further Processing	$ 58,500
Product	Incremental profit(loss)	Decision
Product 10	$ 29,900 ($ 189,600 (-) $ 59,300 (-) $ 100,400)	Should be Process further
Product 12	($ 10,200) ( $ 34,800 (-) $ 15,900 (-) $ 29,100)	Should be Sold at the split-off point
Produvt 14	$ 10,000 ( $ 214,400 (-) $ 54,500 (-) $ 149,900)	Should be Process further
	Particulars	Amount (in $)
	Product 10 ( $ 189,600 (-) $ 100,400)	$ 89,200
	Product 12	$ 15,900
	Product 14 ( $ 214,400 (-) $ 149,900)	$ 64,500
	Total	$ 169,600
	Less: Common costs	($ 100,900)
	Net income	$ 68,700
	Yes, Net income is increasing by $ 10,200 ( $ 68,700 (-) $ 58,500 )