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:

hapter 07: Applying Excel
2
3 Data
4 Exhibit 7-6 Santa Maria Wool Cooperative
5 Cost of wool $192,000
6 Cost of separation process $40,000
7 Sales value of intermediate products at split-off point:
8 Undyed coarse wool $110,000
9 Undyed fine wool $168,000
10 Undyed superfine wool $51,000
11 Costs of further processing (dyeing) intermediate products:
12 Undyed coarse wool $50,000
13 Undyed fine wool $60,000
14 Undyed superfine wool $10,000
15 Sales value of end products:
16 Dyed coarse wool $149,000
17 Dyed fine wool $234,000
18 Dyed superfine wool $90,000

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 residual income?

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

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