Question

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 B

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Chapter 6: Applying Excel Data Exhibit 6-7 Santa Maria Wool Cooperative Cost of wool $233,000 Cost of separation process $40,000 Sales value of intermediate products at split-off point: Undyed coarse wool $132,000 Undyed fine wool $148,000 Undyed superfine wool $70,000 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 $158,000 Dyed fine wool $190,000 Dyed superfine wool $86,000

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?

	Overall profit from processing all intermediate products

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

	from further processing undyed coarse wool from further processing undyed fine wool from further processing undyed superfine wool

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

Sell as is or process further the intermediate product undyed coarse wool?

Sell as is or process further the intermediate product undyed fine wool?

Sell as is or process further the intermediate product undyed superfine wool?

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

	Overall profit from following the plan in part (c)

Answer 1