Answered: Calgary Lumber Company incurs a cost of…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 11E: Sell or process further Calgary Lumber Company incurs a cost of 315 per hundred board feet (hbf) in...

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Calgary Lumber Company incurs a cost of $376 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $562 per hbf. An alternative is to produce a “finished-cut” at a total processing cost of $522 per hbf, which can be sold for $764 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
	Sell Rough-Cut (Alternative 1)	Process Further into Finished-Cut (Alternative 2)	Differential Effects (Alternative 2)
Revenues, per 100 board ft.	$	$	$
Costs, per 100 board ft.
Profit (Loss), per 100 board ft.	$	$	$

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Decision to Sell before or after additional processing

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