Question

Stahl Inc. produces three separate products from a common process costing $100,400. 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 $60,300 15,500 54,100 Cost to Process Further $100,200 29,600 149,900 Sales Value after Further Processing $190,700 34,000 215,200 Product 10 Product 12 Product 14 Determine total net income if all products are sold at the split-off point. Net income $ e Textbook and Media Determine total net income if all products are sold after further processing. Net income $ e Textbook and Media

Answer 1

Part a	Computation of net income at split-off point
		Prodcut 10	Prodcut 12	Prodcut 14	Total
	Sales value at split-off point	$60,300	$15,500	$54,100	$1,29,900
	Less:Joint cost				$1,00,400
	Net Income				$29,500
Part b	Computation of net income after further processing
		Prodcut 10	Prodcut 12	Prodcut 14	Total
	Sales value after further processing	$1,90,700	$34,000	$2,15,200	$4,39,900
	Less:Joint cost				$1,00,400
	Less:Additional cost	$1,00,200	$29,600	$1,49,900	$2,79,700
	Net Income				$59,800
Part c	Computation of Incremental profit
		Prodcut 10	Prodcut 12	Prodcut 14
	Incremental Revenue	$1,30,400	$18,500	$1,61,100
	Less:Incremental costs	$1,00,200	$29,600	$1,49,900
	Incremental Profit/(Loss)	$30,200	-$11,100	$11,200
		Incremental Profit/(Loss)	Decision
	Prodcut 10	$30,200	Sale after Further processing
	Prodcut 12	-$11,100	Sales at split-off point
	Prodcut 14	$11,200	Sale after Further processing
Part d	Computation of net income based on Incremental approach
		Prodcut 10	Prodcut 12	Prodcut 14	Total
	Incremental Profit/(Loss)	$30,200	-$11,100	$11,200	$30,300
	Less:Joint cost				100400
	Net Income				-$70,100
	Yes the Net income as per partd d is lower than the Net income as per part b by $129,900($70,100 + 59,800)