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 Chapter 7: Applying Excel 2 3 Data 4 Exhibit 7-6 Santa Maria Wool Cooperative 5 Cost of wool 6 Cost of separation process 7 Sales value of intermediate products at split-off point 8 Undyed coarse wool 9 Undyed fine wool 10 Undyed superfine wool 11 Costs of further processing (dyeing) intermediate products 12 Undyed coarse wool 13 Undyed fine wool 14 Undyed superfine wool 15 Sales value of end products 16 Dyed coarse wool 17 Dyed fine wool 18 Dyed superfine wool 19 20 Enter a formula into each of the cells marked with a ? below 21 Example: Joint Product Costs and the Contribution Approach 200,000 $40,000 $120,000 $150,000 $60,000 $50,000 $60,000 $10,000 $160,000 $240,000 $90,000 23 Analysis of the profitability of the overall operation 24 Combined final sales value 25 Less costs of producing the end products 26 Cost of wool 27 Cost of separation process 28 Combined costs of dyeing 29 Profit 30 1 Analysis of sell or process further: 32 Coarse Wool Fine Superfine Wool Wool 34 Final sales value after further processing 5 Less sales value at the split-off point 36 Incremental revenue from further processing 7 Less cost of further processing (dyeing) 38 Profit (loss) from further processing 39 4 4Chapter 7 Form Filled in Chapter 7 Form Chapter 7