NEXT Exercise 21-10 Stahl Inc. produces three separate products from a common pr

Question

NEXT Exercise 21-10 Stahl Inc. produces three separate products from a common process costing$100,700. 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 Cost to Process Further Sales Value after Further Processing $100,200 30,500 149,800 $189,900 Product 10 Product 12 Product 14 $ 59,100 16,000 54,000 35,000 215,300 Determine total net income if all products are sold at the split-off point. Net income s LINK TO TEXT VIDEO: SIMILAR EXERCISE Determine total net income if all products are sold after further processing. Net income

Explanation / Answer

Sales Vaalue at split off point Cost to process further Sales value after further processing Product 10 $                59,100 $               100,200 $                                   189,900 Product 12 $                16,000 $                 30,500 $                                     35,000 Product 14 $                54,000 $               149,800 $                                   215,300 $              129,100 $               280,500 $                                   440,200 Common Processing Cost $                                   100,700 Total Net Income if all products sold at split off point = 129,100-100,700 Total Net Income if all products sold at split off point $                                     28,400 Total net income if all products are sold after further processing = 440200-100700-280500 Answer $                                     59,000 Part (b) Sales Vaalue at split off point Cost to process further Sales value after further processing Incremental Profit / (Loss) Decision Product 10 $                59,100 $               100,200 $                                   189,900 $         30,600 Should be processed further Product 12 $                16,000 $                 30,500 $                                     35,000 $       (11,500) Should not be processed further Product 14 $                54,000 $               149,800 $                                   215,300 $         11,500 Should be processed further $              129,100 $               280,500 $                                   440,200 So Sales value base on above decision Sales Vaalue at split off point Cost to process further Sales value after further processing Product 10 $               100,200 $                                   189,900 Product 12 $                16,000 Product 14 $               149,800 $                                   215,300 $                16,000 $               250,000 $                                   405,200 Common Processing Cost $                                   100,700 Total Sales value $                                   421,200 Total Processing cost $                                   350,700 Net Profit $                                     70,500 Total Net income using result from part (b) $                                     70,500 is Net Income from part (b) different Yes net income is higher by $                                     11,500

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