Conservatory Lumber sells rough and finished lumber for building products. At one of the Company mills in the Northwest, it processesonly one type of wood into two products: rough-cut lumber (sold for further processing) and dimensional lumber (for paneling and soon). The company has one particular cutting machine on which it can produce either of two types of lumber: rough-cut or dimensional.Sales demand for both products is such that the machine could operate at full capacity on either of the products. Regardless of what isproduced, demand is such that Conservatory Lumber can sell all the output it produces at current prices. One unit of rough cut lumberrequires 0.6 hours of machine time, and one unit of the dimensional lumber requires four hours of machine time. Each "unit" consistsof 1,000 board-feet.Following are the costs per unit for the lumber:Selling priceCostsMaterialsLaborCutting machine depreciationOther depreciation (fixed) bOther factory costs (allocated) bTotal cost per unitGross margin per unitPer Unit (1,000 board feet in aunit)Req A1Rough-Cut$ 3,000Req A2Req B$ 1,2001,200aThis Item is a variable cost because it is based on machine usage.bThis item is a fixed cost because it is unaffected by the usage of the cutting machine.All other costs are the same whether regardless of the production mix, so you may ignore them.1535400Required:a-1. Calculate the contribution margin per hour of machine time for the two products with and without considering cutting machinedepreciation as a variable cost.Contribution margin per hour (without depreciation)Contribution margin per hour (with depreciation)$ 2,850$ 150a-2. Should Conservatory Lumber produce rough-cut or dimensional lumber, or both?b. Suppose the machine usage time for the dimensional lumber is unknown. What machine usage (units per hour) for dimensionallumber would make Conservatory Lumber Indifferent to what production mix was chosen?Complete this question by entering your answers in the tabs below.Dimensional$ 7,000< Req A1$ 1,4002,000100200400$ 4,100$ 2,900Calculate the contribution margin per hour of machine time for the two products with and without considering cutting machinedepreciation as a variable cost.Rough-CutDimensionalReq A2 >

Conservatory Lumber sells rough and finished lumber for building products. At one of the Company mills in the Northwest, It processe only one type of wood Into two products: rough-cut lumber (sold for further processing) and dimensional lumber (for paneling and so on). The company has one particular cutting machine on which It can produce either of two types of lumber: rough-cut or dimensional. Sales demand for both products is such that the machine could operate at full capacity on either of the products. Regardless of what produced, demand is such that Conservatory Lumber can sell all the output it produces at current prices. One unit of rough cut lumber requires 0.6 hours of machine time, and one unit of the dimensional lumber requires four hours of machine time. Each "unit" consists of 1,000 board-feet. Following are the costs per unit for the lumber: Selling price Costs Materials Labor Cutting machine depreciation Other depreciation (fixed)b Other factory costs (allocated) b Total cost per unit Gross margin per unit Per Unit (1,000 board feet in a unit) Req B Rough-Cut $ 3,000 Contribution margin per hour (without depreciation) Contribution margin per hour (with depreciation) $ 1,200 1,200 15 35 400 $ 2,850 $ 150 a This Item is a variable cost because it is based on machine usage. b This item is a fixed cost because it is unaffected by the usage of the cutting machine. All other costs are the same whether regardless of the production mix, so you may ignore them. Required: a-1. Calculate the contribution margin per hour of machine time for the two products with and without considering cutting machine depreciation as a variable cost. a-2. Should Conservatory Lumber produce rough-cut or dimensional lumber, or both? b. Suppose the machine usage time for the dimensional lumber is unknown. What machine usage (units per hour) for dimensional lumber would make Conservatory Lumber Indifferent to what production mix was chosen? Complete this question by entering your answers in the tabs below. Dimensional $ 7,000 Req A1 Reg A2 Calculate the contribution margin per hour of machine time for the two products with and without considering cutting machine depreciation as a variable cost. < Req A1 $ 1,400 2,000 100 200 400 $ 4,100 $ 2,900 Rough-Cut Dimensional Req A2 >