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

  

  

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		$
Product 12		$
Product 14		$

  

  

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                                                                       higherlower by $

Answer 1

req 1.			Product 10	Product 12	Product 14	Total
Sales value at splitt off	59300	15900	54500	129700
Less: Joint cost					100900
Net income					28800
Req 2.
			Product 10	Product 12	Product 14	Total
Sales after further processing	189600	34800	214400	438800
Less: Further processing cost	100400	29100	149900	279400
Net realisable value		89200	5700	64500	159400
Less: Joint cost					100900
Net Income					58500
Req 3.
			Product 10	Product 12	Product 14	Total
Sales after further processing	189600	34800	214400	438800
Less: Sales value at splitt off	59300	15900	54500	129700
Incremental sales		130300	18900	159900	309100
Less: Further processing cost	100400	29100	149900	279400
Incremental Income		29900	-10200	10000	29700
Decision			Further	At Splitt	Further
			processing	Off point	processing
product 10	$ 29900	Further processed
Product 12	($10200)	At splitt of point
Product 14	$10000	Further processed
Req 4.
			Product 10	Product 12	Product 14	Total
Sales value		189600	15900	214400	419900
Less: Further processing cost	100400	0	149900	250300
Net realisable value		89200	15900	64500	169600
Less: Joint cost					100900
Net Income					68700
Req 5.
Yes, the net Income has changed