The Excel worksheet form that appears below is to be used to recreate an example earlier in the chapter. Download the workbook containing this form from Connect. On the website you will also receive instructions about how to use this worksheet form.

You should proceed to the requirements below only after completing your worksheet.
Required:
1. Check your worksheet by changing the cost of further processing un-dyed 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 company's operations? If your recommendation is followed, what should be the overall profit of the company?
Data
Exhibit 7-6 Santa Maria Wool Cooperative
Cost of wool ....................................................... $290,000
Cost of separation process ........................................ $40,000
Sales value of intermediate products at split-off point:
Un-dyed coarse wool ............................................ $100,000
Un-dyed fine wool ............................................... $110,000
Un-dyed superfine wool .......................................... $90,000
Costs of further processing (dyeing) intermediate products:
Un-dyed coarse wool ............................................ $50,000
Un-dyed fine wool ................................................ $60,000
Un-dyed superfine wool ......................................... $10,000
Sales value of end products:
Dyed coarse wool .................................................. $180,000
Dyed fine wool ..................................................... $210,000
Dyed superfine wool ................................................. $90,000

Transcribed Image Text:

1 Chapter T: Applying Exce 3 Data A 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 superine wool Li Costs of further processing (dyeing) intermediate products 12 Undyed coarse wool 13 Undyed fine wool 14 Undyed supertine wool 15 Sales value of end products 16 Dyed coarse w 17 Dyed fine wool 18 Dyed superfine wool 19 20 Enter a formula into each of the ceils marked wth a? below 21 Example: Joint Product Costs and the Contribution Approach $200,000 $40,000 $120,000 $150.000 560.000 $50,000 360,000 10,000 ool $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 31 Analysis of sell or process further: Coarse Fine Superfine WoolWoWoo 34 Final sales value ater further processing 35 Less sales value at the split-off point 30 Incremental revenue from further processing 37 Less cost of further processing (dyeing) 38 Profit losa) from further proceasing 39 Chapter 7 Form Filled Chapter For Chapter