# Calgary Lumber Company incurs a cost of \$370 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for \$542 per hbf. An alternative is to produce a “finished-cut” at a total processing cost of \$526 per hbf, which can be sold for \$754 per hbf.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 AnalysisSell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2)March 15 SellRough-Cut(Alternative 1)Process Furtherinto Finished-Cut(Alternative 2)DifferentialEffects(Alternative 2)Revenues, per 100 board ft.\$\$\$Costs, per 100 board ft.   Profit (Loss), per 100 board ft.\$\$\$b.  Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

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Calgary Lumber Company incurs a cost of \$370 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for \$542 per hbf. An alternative is to produce a “finished-cut” at a total processing cost of \$526 per hbf, which can be sold for \$754 per hbf.

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 SellRough-Cut(Alternative 1) Process Furtherinto Finished-Cut(Alternative 2) DifferentialEffects(Alternative 2) Revenues, per 100 board ft. \$ \$ \$ Costs, per 100 board ft. Profit (Loss), per 100 board ft. \$ \$ \$

b.  Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

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Step 1

Differential analysis:

Differential analysis refers to the analysis of differential revenue that could be gained or differential cost that could be incurred from the available alternative options of business.

Step 2

a. The differential analysis of Company CL as on March 15, for the given alternative is shown as follows:

Step 3

Conclusion: As per the differential analysis of Company CL as on March 15, selling finis...

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