Calculate the residual income

Question

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 C 1 Chapter : Applying Excel 2 3 Data 4 Exhibit 12-6 Santa Maria Wool Cooperative 5 Cost of wool $182,000 6 Cost of separation process $40,000 7 Sales value of intermediate products at split-off point: 8 Undyed coarse wool $128,000 9 Undyed fine wool $172,000 10 Undyed superfine wool $72,000 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 $168,000 17 Dyed fine wool $204,000 18 Dyed superfine wool $97,000

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? (Omit the "$" sign in your response.)

Overall profit from processing all intermediate products

$

(b)	What is the residual income? (Input all amounts as positive values. Omit the "$" sign in your response.)

(Loss or profit) from further processing undyed coarse wool	$
(Loss or profit) from further processing undyed fine wool	$
(Loss or profit)from further processing undyed superfine wool	$

(c)	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)	If your recommendation in part (c) is followed, what would be the company's overall profit? (Omit the "$" sign in your response.)

Overall profit from following the plan in part (c)

$