Stahl Inc. produces three separate products from a common process costing $100,8

Question

Stahl Inc. produces three separate products from a common process costing $100,800. 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 Cost to Sales Value at Split-Off Process after Further Point Further Processing Product 10 $59,500 $100,400 $191,000 Product 12 15,600 30,000 34,400 Product 14 55,600 150,400 215,300 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 $ Product Incremental profit (loss) Product 10 Product 12 Product 14 Determine total net income using the results from previous part.

Net income $

Explanation / Answer

Allocation of joint cost is on the basis of sales value proportion.

Gain = sales vaue -cost -joint cost

Case 1 If all the products are sold at split off point Particulars Product 10 Product 12 Product 14 Total Cost 59500 15600 55600 130700 Sale value at splitoff point 100400 30000 150400 280800 Joint cost 36041.02564 10769.23077 53989.74359 100800 Gain/Loss 4858.974359 3630.769231 40810.25641 Case 2 If all the products are sold after processing Particulars Product 10 Product 12 Product 14 Cost 59500 15600 55600 130700 Sale value at splitoff point 191000 34400 215300 440700 Joint cost 43686.86181 7868.209666 49244.92852 100800 Gain/Loss 87813.13819 10931.79033 110455.0715 Incremental profit/loss 82954.16383 7301.021103 69644.81507

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