Tools Help Helo I Sntem A BACK common process costing s 100,700. Each of the pro
ID: 2539076 • Letter: T
Question
Tools Help Helo I Sntem A BACK common process costing s 100,700. Each of the produts can be sold at the spit off point or can be processed further and then sold far a higher price Shown below are cont and selling price data for a recent period. Cost to Process Further Sales Value after Further Sales Value at Split Product 10 Product 12 Product 14 Point 59,100 16,000 54,000 35,000 215,300 30,500 Determine total net income if all products are sold at the spit-off point ) and determine which products e.g. (45).) Decision Product Product 10 Incremental profit (loss)Explanation / Answer
Answer:
1
Net Income
28,400
Working notes for the answer:
Amount $
Amount $
Sales Value at Split Off
Product 10
59,100
Product 12
16,000
Product 14
54,000
Total Sales Valie
129,100
Less:
Joint Costs (cost of goods sold)
100700
Net Income
28,400
_______________________________________________
2
Net Income
59,000
Working notes for the answer:
Sales Value after Further Processing
Product 10
189,900
Product 12
35,000
Product 14
215,300
Total
440,200
Less:Joint Costs (cost of goods sold)
100700
Net income before further processing
339,500
Less:
Cost of Further Processing
Product 10
100,200
Product 12
30,500
Product 14
149,800
Total Furhter processing cost
280,500
Net Income
59,000
______________________________________________
3
Product 10
30,600
Futher process
Product 12
-11,500
Sold at split off
Product 14
11,500
Futher process
Working for the answer:
Product 10
Product 12
Product 14
Sales Value after further processing
189,900
35,000
215,300
Less: sales valuu at split off
-59,100
-16,000
-54,000
Incremental Revenue
130,800
19,000
161,300
Less:
Incremental Costs
(Cost of Further Processing)
-100,200
-30,500
-149,800
Incremental Profit (Loss)
30,600
-11,500
11,500
As we can see that Product 10 and product 14 give positive result so they should be process further and
Product 12 should not be process futher becise it give loss after futher processing so Product 12 should sold at splitoff point
_______________________________
4
Net Income
70,500
Working for the answer
Sales Value
Product 10
189,900
Product 12
16,000
Product 14
215,300
Total
421,200
Less:Joint Costs (cost of goods sold)
-100700
Net income before further processing
320,500
Less:
Cost of Further Processing
Product 10
100,200
Product 14
149,800
Total Furhter processing cost
250,000
Net Income
70,500
Net income increased by $11,500 (70500-59000)
Net Income
28,400