Acc560 Managerial Accounting: E7-8 Benson, Inc. produces three separate products from a common

Acc560 Managerial Accounting
Week 5


E7-8
Benson, 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 Vue After Further Processing

Product 12 50,000 100,000 190,000

Product 14 10,000 30,000 35,000

Product 16 60,000 150,000 220,000



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 after further processing.
c. Using incremental analysis, determine which products should be sold at the split-off point and which should be processed further.
d. Determine total net income using the results from the previous part of the question.
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