Question

CALCULATOR FULL SCREEN PRINTER VERSION BLACK N Exercise 20-10 Stahl Inc. produces three separate products from a common process costing $100,300. 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. Product 10 Product 12 Product 14 Sales Value at Split-Off Point $59,300 15,700 55,300 Cost to Process Further $100,700 31,000 150,000 Sales Value after Further Processing $189,300 34,100 214,400 Determine total net income if all products are sold at the split-off point. Net income Determine total net income if all products are sold after further processing. Net Income od datorming which products should be sold at the split-off point and which should be processed further. (Enter negative amounts using

Answer 1

PARTICULARS	COST ALLOCATION	SALES VALUE AT SPLIT OFF POINT	COST TO PROCESS FURTHER	SALES VALUE AFTER FURTHER PROCESSING	PROFITS IF PRODUCT IS SOLD AT SPLIT OFF POINT	COMMON COST + FURTHER COST	PROFIT IF PRODUCT IS SOLD AFTER PROCESSING
PRODUCT 10	45646.89	59300	100700	189300	13653.11	146346.89	42953.11
PRODUCT 12	12085.26	15700	31000	34100	3614.74	43085.26	-8985.26
PRODUCT 14	42567.84	55300	150000	214400	12732.16	192567.84	21832.16
THE COMMON COST OF PROCESSING IS ALLOCATED BETWEEN THE JOINT PRODUCTS ON THE BASIS
OF RATIO OF SALES VALUE AT SPLIT OFF POINT.
ALLOCATED COST = COMMON PROCESSING COST X (SALES VALUE AT SPLIT OFF POINT / TOTAL OF SALES VALUE AT SPLIT OFF POINT)
1	TOTAL NET INCOME IF ALL PRODUCTS ARE SOLD AT SPLIT OFF POINT
	TOTAL REVENUE - TOTAL COST
	$130300 - $ 100300
	$30000
2	TOTAL NET INCOME IF ALL PRODUCTS ARE SOLD AFTER FURTHER PROCESSING
(A)	TOTAL COST AFTER FURTHER PROCESSING = $100300 + $100700 + $31000 + $150000 = $382000
(B)	TOTAL REVENUE AFTER FURTHER PROCESSING = $437800
	(A) - (B)
	$55800
3	INCREMENTAL PROFIT OR LOSS
	PRODUCT 10	$42,953.11		PRODUCT 10 SHOULD BE PROCESSED FURTHER
	PRODUCT 12	-$8,985.26		PRODUCT 12 SHOULD BE SOLD AT SPILT OFF POINT
	PRODUCT 14	$21,832.16		PRODUCT 14 SHOULD BE PROCESSED FURTHER
4	NET INCOME ACCORDING TO PART 3
	PRODUCT	SALES VALUE	COST	PROFIT
	PRODUCT 10	189300	146346.89	42953.11
	PRODUCT 12	15700	12085.26	3614.735
	PRODUCT 14	214400	192567.84	21832.16
	TOTAL			68400
	BY FOLLOWING THIS METHOD THE COMPANY CAN INCRREASE ITS NET GAIN BY $12600