4 Exhibit 11-7 Santa Maria Wool Cooperative 5. Cost of wool $168,000 GCost of separation process S40,000 7 Sales value of intermediate products at split-off point: Undyed coarse wool $114,000 9 Undyed fine wool $135,000 10 Undyed superfine wool S60,000 11 Costs of further processing (dyeing) intermediate products: 12 Undyed coarse wool 550.000 13 Undyed fine wool S60,000 14 Undyed superfine waal $10,000 15 Sales value of end products 16 Dyed coarse wool S159.000 17 Dyed fine wool $210,000 18 Dyed superfine wool S92.000 19 20 Enter a formula into each of the cells marked with a ? below 21 Example: Joint Product Costs and the Contribution Approach 22 23 Analysis of the profitability of the overall operation: 24 Combined final sales value S 461,000 25 Less costs of producing the end products 26 Cast of wool S 168,000 27 Cost of separation process $40,000 28 Combined costs of dyeing $120.000 328.000 29 Prolit S 133.000 30 21 Analysis of sell or process further 32 Coarse Fine Superfine 33 WOOV Wood Wool 34 Final sales value after further processing $159,000 S210,000 S92,000 35 Less sales value at the split-off point S114,000 $135,000 580.000 36 Incremental revenue from further processing $45,000 $75,000 $32,000 37 Less cost of further processing (dyeing) $50,000 $60,000 $10,000 38 Financial advantage (disadvantage of further processing, S5.000 $15,000 522.000 39 C-1. With these new costs and selling prices, what recommendations would you make concerning the company's operations? Sel as is or process further the intermediate product undyed coarse wool? Sel as is or process further the intermediate product undyed fine wool? Sel as is or process further the intermediate product undyed superfine wool? Sel as is Process further Process further c-2. If your recommendation in part (C-1) is followed, what would be the company's overall profit? Overal profit from following the plan in part()