Stahl Inc. produces three separate products from a common process costing $ 100,

Question

Stahl Inc. produces three separate products from a common process costing $ 100,500 . 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.

(a)

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

b)

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

c)

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).)

d) Determine total net income using the results from previous part

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

Sales Value
at Split-Off
Point Cost to
Process
Further Sales Value
after Further
Processing Product 10 $ 60,100 $ 100,300 $ 190,200 Product 12 15,500 29,200 34,200 Product 14 54,100 151,000 214,800

Explanation / Answer

Solution a:

Solution b:

Solution c:

Solution d:

Computation of net income - If products sold at split off Point Particulars Product 10 Product 12 Product 14 Total Sale Value $60,100.00 $15,500.00 $54,100.00 $129,700.00 Joint cost $100,500.00 Net Income $29,200.00

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