Question

eBook Show Me How Calculator Sell or Process Further Calgary Lumber Company Incurs a cost of $376 per hundred board feet (hof) in processing certain "rough-cut" lumber, which it sells for $570 per hof. An alternative is to produce a finished-cut" at a total processing cost of $523 per hbt, which can be sold for $752 per hof, a. Prepare a differential analysis dated March 15 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). Differential Analysis Sell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2) March 15 Sell Process Further Differential Rough-Cut into Finished-Cut Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues per 100 board it. Costs, per 100 board ft. Profit (Loss), per 100 board it. b. Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

Answer 1

Ans:

Req.1

Differential Analysis
Sell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2)
March 15
	Sell-Rough-Cut (Alternative 1)	Process Further into Finished-Cut (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues, per 100 board ft	$570	$752	$182
Costs, per 100 board ft	$376	$523	-$147
Income (Loss), per 100 board ft	$194	$229	$35

Req.2

Choose Alternative -2

(It is better to process further into finished cut so as to earn incremental income of $35)