? Chapter 12: Applying Excel Data Exhibit 12-6 Santa Maria Wool Cooperative Cost

Question

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Chapter 12: Applying Excel Data Exhibit 12-6 Santa Maria Wool Cooperative Cost of wool $200,000 Cost of separation process $40,000 Sales value of intermediate products at split-off point: Undyed coarse wool $120,000 Undyed fine wool $150,000 Undyed superfine wool $60,000 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 $160,000 Dyed fine wool $240,000 Dyed superfine wool $90,000 Enter a formula into each of the cells marked with a ? below 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 ? Analysis of sell or process further: Coarse Fine Superfine Wool Wool 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) ? ? ? Profit (loss) from further processing ? ?

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Explanation / Answer

Combined final sales value     [160000+240000+90000] 490000 Less costs of producing the end products Cost of wool 200000 Cost of separation process 40000 Combined costs of dyeing [50000+60000+10000] 120000 360000 profit 130000 coarse wool Fine wool Superfine wool Final sales value after further processing 160000 240000 90000 less: sales value at the split-off point 120000 150000 60000 Incremental revenue from further processing 40000 90000 30000 less: cost of further processing (dyeing) 50000 60000 10000 Profit (loss) from further processing - 10000 30000 20000

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