Data

Exhibit $13-5$ Santa Maria Wool Cooperative

Cost of wool $$209,000$

Cost of separation process $$40,000$

Sales value of intermediate products at split$-$off point:

Undyed coarse wool $$139,000$

Undyed fine wool $$152,000$

Undyed superfine wool $$66,000$

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 $$146,000$

Dyed fine wool $$229,000$

Dyed superfine wool $$99,000$

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 $$474,000$

Less costs of producing the end products:

Cost of wool $$209,000$

Cost of separation process $$40,000$

Combined costs of dyeing $$120,000369,000$

Profit $$105,000$

Analysis of sell or process further:

Coarse Fine Superfine

Wool Wool Wool

Final sales value after further processing $$146,000$ $$229,000$ $$99,000$

Less sales value at the split$-$off point $$139,000$ $$152,000$ $$66,000$

Incremental revenue from further processing $$7,000$ $$77,000$ $$33,000$

Less cost of further processing $($dyeing$)$ $$50,000$ $$60,000$ $$10,000$

Financial advantage $($disadvantage$)$ of further processing $-$$$43,000$ $$17,000$ $$23,000$

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$)?\_\_\_\_\_$