E7-10 Schultz, 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 furtherand then sold for a higher price. Shown below are cost and selling price data for a recentperiod.Sales Value Cost to Sales Valueat Split-off Process after FurtherPoint Further ProcessingProduct 12 $50,000 $100,000 $190,000Product 14 10,000 30,000 35,000Product 16 60,000 150,000 220,000Instructions
(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 after further processing.
(c) Using incremental analysis, determine which products should be sold at the split-offpoint and which should be processed further.
(d) Determine total net income using the results from
(c) and explain why the net in?come is different from that determined in