Chapter 13: Applying Excel Requirement 1 Req. 1: Enter $30,000 for the cost of further processing undyed coarse wool in the green cell to the left. If your formulas are correct, the overall profit from processing all intermediate products into final products should now be $150,000 and the financial advantage of further processing coarse wool $10,000. If not, got back to the previous sheet, correct your formulas, and use the copy formulas button until your answers are correct. $200,000 $40,000 How should operations change in response to this change in cost? $120,000 $150,000 $60,000 Data Exhibit 13-7 Santa Maria Wool Cooperative Cost of wool Cost of separation process Sales value of intermediate products at split-off point: Undyed coarse wool Undyed fine wool Undyed superfine wool Costs of further processing (dyeing) intermediate products: Undyed coarse wool Undyed fine wool Undyed superfine wool Sales value of end products Dyed coarse wool Dyed fine wool Dyed superfine wool ? $60,000 $10,000 $160,000 $240,000 $90,000 Example: Joint Product Costs and the Contribution Approach ? Analysis of the profitability of the overall operation: Combined final sales value Less costs of producing the end products: Cost of wool Cost of separation process Combined costs of dyeing Profit ? ? ? 2 ? Analysis of sell or process further: Coarse Wool Fine Wool Superfine Wool Final sales value after further processing Less sales value at the split-off point Incremental revenue from further processing Less cost of further processing (dyeing) Financial advantage (disadvantage) of further processing