Question

1 Chapter 12: Applying Excel 3 Data 4 Exhibit 12-7 Santa Maria Wool Cooperative 5 Cost of wool $200,000 6 Cost of separation process $40,000 7 Sales value of intermediate products at split-off point 8 Undyed coarse wool 9 Undved fine wool $120,000 $150,000 10 Undved superfine wool $60,000 11 Costs of further processing (dyeing) intermediate products 12 Undyed coarse wool $50,000 $60,000 13 Undyed fine wool 14 Undved superfine wool $10,000 15 Sales value of end products 16 Dy 17 Dyed fine wool 18 Dyed superfine wool 19 ed coarse wool $160,000 $240,000 $90,000 20 Enter a formula into each of the cells marked with a ? below 21 Example: Joint Product Costs and the Contribution Approach 1 Example: Joint Product Costs and the Contribution Approach Analysis of the profitability of the overall operation Combined final sales value 5 Less costs of producing the end products 5 Cost of wool 7 Cost of separation process Combined costs of dyeing Profit 1 Analysis of sell or process further: Coarse Superfine Wool ine Wool Wool 4 Final sales value after further processing 5 Less sales value at the split-off point Incremental revenue from further processing 7 Less cost of further processing (dyeing) Financial advantage (disadvantage) of further pocessing

Answer 1

4 Exhibit 12-7 Santa Maria Wool Cooperative 5 Cost of Wool $200,000 $40,000 6 Cost of separation process 7 Sales value of intermediate products at split-off point: 8 Undyed coarse wool 9Undyed fine wool 10 Undyed superfine wool 11 Costs to further processing (dyeing) intermediate products: 12 Undyed coarse wool 13 Undyed fine wool 14 Undyed superfine wool 15 Sales value of end products: 16 Dyed coarse wool 17 Dyed fine wool 18 Dyed superfine wool $120,000 $150,000 $60,000 $50,000 $60,000 $10,000 $160,000 $240,000 $90,000 19 20 Enter a formula into each ofthe cells marked with a ? Below 21 Example: Joint Product Costs and the Contribution Approach 23 Analysis of the profitability of the overall operation: 24 Combined final sales value $490,000 25 Less cost of producing the end products: 26 Cost of wool ($200,000) ($40,000) $120,00O (S360,000 27 Cost of separation process 28 Combined cost of dyeing 29 Profit 30 31 Analysis of sell or process further: 32 Fine Superfine Wool 34 Final sales value after further 160,000 $240,000 S90,000 35 Less sales value at split-off point 36 Incremental revenue from further $40,000 90,000 530,000 $50,000)$60,000) (S10,000) 37 Less cost offurther processing (dyeing) 38 Financial advantage (disadvantage) of further processing10,00)3000$20,000 39

Please see the formulas below:

4 Exhibit 12-7 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 9Undyed fine wool 10 Undyed superfine wool 11 Costs to further processing (dyeing) intermediate products: 12 Undyed coarse wool 13 Undyed fine wool 14 Undyed superfine wool 15 Sales value of end products: 16 Dyed coarse wool 17 Dyed fine wool 18 Dyed superfine wool 120000 50000 60000 160000 240000 19 20 Enter a formula into each ofthe cells marked with a ? Below 21 Example: Joint Product Costs and the Contribution Approach 23 Analysis of the profitability of the overall operation: 24 -SUM(B16:B18) Combined final sales value 25 Less cost of producing the end products: 26 Cost of wool -B5 27 Cost of separation process 28 Combined cost of dyeing 29 Profit -SUM(B12:B14) -SUM(B26:B28) -C24+C28 30 31 Analysis of sell or process further: 32 Superfine Wool Wool Wool 34 Final sales value after further -B16 B17 -B18 35 -B10 Less sales value at split-off point -B8 36 Incremental revenue from further B34+B35 C34+C35 -D34+D35 37 Less cost offurther processing (dyeing) B12 -B14 :-813 38 Financial advantage (disadvantage) of further processing -B36+B37 -C36+C37 -D36+D37 39