Stahl Inc. produces three separate products from a common process costing $100,000. 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
Product 1 $60,000 $100,000 $190,000
Product 2 15,000 30,000 35,000
Product 3 55,000 150,000 215,000
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 in further processing.
c) Using incrementals analysis, determine which products should be sold at the split-off point and whicg should be processed further.
d) Determine total net income using the results c) and explain why the net income is different from that determined in (b).
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