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:

DataExhibit 13-7 Santa Maria Wool Cooperative

Cost of wool$219,000

Cost of separation process$40,000

Sales value of intermediate products at split-off point:

Undyed coarse wool$114,000

Undyed fine wool$133,000

Undyed superfine wool$78,000

Costs of further processing (dyeing) intermediate products:

Undyed coarse wool$50,000

Undyed fine wool$60,000

Undyed superfine wool$10,000

Sales value of end products:

Dyed coarse wool$145,000

Dyed fine wool$201,000

Dyed superfine wool$85,000

If your formulas are correct, you should get the correct answers to the following questions.

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

b. What is the financial advantage (disadvantage) from further processing?

c-1. With these new costs and selling prices, what recommendations would you make concerning the companys operations?

c-2. If your recommendation in part (c-1) is followed, what would be the companys overall profit?