Question

n Stahl Inc. produces three separate products from a common process costing $ can be sold at the split-off point or can be processed f are cost and selling price data for a recent period. urther and then sold for Sales Value at Split-off Point $60,000 15,000 55,000 Cost to Process Further $100,000 30,000 150,000 Sales Value Product 10 Product 12 Product 14 after Further Processing $190,000 35,000 215,000 Instructions (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 processir (c) Using incremental analysis, determine which products should be sold at point and which should be processed further. Determine total net income using the results from (c) and explain why th is different from that determined in (b). (d) NOTE: Enter a number in cells requesting a value; enter either a number (a) Determine total net income if all products are sold at the split-off point. Sales Joint costs Net income Value Value (b) Determine total net income if all products are sold after further processir Sales Joint costs Additional costs Net income Value Value Value (c) Using incremental analysis, determine which products should be sold at point and which should be processed further Incremental revetn Product 10

Answer 1

a)	If products are sold at split off point
		Sales value
	Product 10	$60,000
	Product 12	$15,000
	Product 14	$55,000
	Total	$130,000
	Sales	$130,000
	Joint Cost	$100,000
	Net Income	$30,000	( $ 130000-$ 100000)
b)	If products are sold after further processing
	Products	Sales Value after further processing	Cost to process further	Net Realizable Value
	Product 10	$190,000	$100,000	$90,000	($190000-$90000)
	Product 12	$35,000	$30,000	$5,000	($35000-$30000)
	Product 14	$215,000	$150,000	$65,000	($215000-$15000)
	Total	$440,000	$280,000	$160,000
	Sales	$440,000
	Joint Cost	$280,000
	Additional Costs	$100,000
	Net Income	$60,000	( $ 440000-$ 280000-$ 100000)
c.	Products	Sales Value at split off point (a)	Net Realizable Value(b)	Increamental profit/(Loss) c=(a-b)		Decision
	Product 10	$60,000	$90,000	$30,000	(90000-60000)	{Process Further
	Product 12	$15,000	$5,000	($10,000)	(5000-15000)	Sell at split off
	Product 14	$55,000	$65,000	$10,000	(65000-55000)	{Process Further
d.	Products	Net Realizable Value or Sales
	Product 10	$90,000
	Product 12	$15,000
	Product 14	$65,000
	Total Sales	$170,000
	Less: Joint Cost	$100,000
	Net Income	$70,000	($170000-$ 100000)