1.

Check your worksheet by changing the cost of further processing undyed coarse wool in cell B12 to $30,000. The overall profit from processing all intermediate products into final products should now be $150,000 and the profit from further processing coarse wool should now be $10,000. If you do not get these answers, find the errors in your worksheet and correct them. How should operations change in response to this change in cost?

2.

In industries that process joint products, the costs of the raw materials inputs and the sales values of intermediate and final products are often volatile. Change the data area of your worksheet to match the following:

a.

What is the overall profit if all intermediate products are processed into final products?

b.

What is the profit from further processing each of the intermediate products?

c.

With these new costs and selling prices, what recommendations would you make concerning the companys operations? If your recommendation is followed, what should be the overall profit of the company?

1.

Check your worksheet by changing the cost of further processing undyed coarse wool in cell B12 to $30,000. The overall profit from processing all intermediate products into final products should now be $150,000 and the profit from further processing coarse wool should now be $10,000. If you do not get these answers, find the errors in your worksheet and correct them. How should operations change in response to this change in cost?

2.

In industries that process joint products, the costs of the raw materials inputs and the sales values of intermediate and final products are often volatile. Change the data area of your worksheet to match the following:

a.	What is the overall profit if all intermediate products are processed into final products?
b.	What is the profit from further processing each of the intermediate products?
c.	With these new costs and selling prices, what recommendations would you make concerning the companys operations? If your recommendation is followed, what should be the overall profit of the company?

1Chapter 8: Applying Excel 3 Data 4 Example E 60,000 $100,000 $5,000 $10,000 Cost of equipment needed 6 Working capital needed Overhaul of equipment in four years 8 Salvage value of the equipment in five year 9 Annual revenues and costs 10 Sales revenues $200,000 $125,000 $35,000 14% 1 Cost of goods sold 12 Out-of-pocket operating costs 13 Discount rate 14 15 Enter e formule into each of the cells marked with a? below 16 Exhibit 8-6 17 Years Now 19 Purchase of equipment 20 Investment in working capital 21 Sales 22 Cost of goods sold 23 Out-of-pocket operating costs 24 Overhaul of equipment 25 Savage value of the equipment 26 Working capital released 27 Total cash flows (a) 28 Discount factor 14%) (b) 29 Present value of cash flows (a) x (b) 30 Net present value 31 32 "Use the fomulas from Appendix 13B 33 Present value of $1 1(1+ritn 341 Present value of an annuity of $1?(1/r)"(141/(1 +r)An)) 35 where n is the number of years and r is the discount rate 36 FormFiled in