Available with McGraw-Hill’s Connect™ Accounting.
The Excel worksheet form that appears below is to be used to recreate the example in the text on pages 548–552. Download the workbook containing this form from the Online Learning Center at www.mhhe.com/garrison14e. On the website you will also receive instructions about how to use this worksheet form.
You should proceed to the requirements below only after completing your worksheet.
1. Check your worksheet by changing the cost of further processing undyed coarse wool in cell B12 to $30,000. The overall profit from processing all intermediate products into final prod- ucts should now be $150,000 and the profit from further processing coarse wool should now be
$10,000. If you do not get these answers, find the errors in your worksheet and correct them.
How should operations change in response to this change in cost?
2. 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. What is the overall profit if all intermediate products are processed into final products?
b. What is the profit from further processing each of the intermediate products?
c. With these new costs and selling prices, what recommendations would you make con- cerning the company’s operations? If your recommendation is followed, what should be the overall profit of the company?