Calgary Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: ■ Raw lumber division: $125 per 100 board-feet of raw lumber ■ Finished lumber division: $145 per 100 board-feet of finished lumber Assume that there is no board-feet loss in processing raw lumber into finished lumber. Raw lumber can be sold at $175 per 100 board-feet. Finished lumber can be sold at $345 per 100 board-feet. Q. Should Calgary Lumber process raw lumber into its finished form? Show your calculations.

Managerial Accounting
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ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
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Chapter10: Evaluating Decentralized Operations
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Calgary Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows:

■ Raw lumber division: $125 per 100 board-feet of raw lumber

■ Finished lumber division: $145 per 100 board-feet of finished lumber

Assume that there is no board-feet loss in processing raw lumber into finished lumber.

Raw lumber can be sold at $175 per 100 board-feet.

Finished lumber can be sold at $345 per 100 board-feet.

Q. Should Calgary Lumber process raw lumber into its finished form? Show your calculations.

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