Practice problem Lumber and Cabinetry. The Lumber Division is responsible for harvesting and preparing lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The lumber produced by the Lumber Division has a variable cost of $3.00 per linear foot and full cost of $4.00. Comparable quality wood sells on the open market for $9.00 per linear foot.1. Assume you are the manager of the Cabinetry Division. Determine the maximum amount you would pay for lumber.2. Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have excess capacity. Repeat assuming you have no excess capacity.
Practice problem Lumber and Cabinetry. The Lumber Division is responsible for harvesting and preparing lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The lumber produced by the Lumber Division has a variable cost of $3.00 per linear foot and full cost of $4.00. Comparable quality wood sells on the open market for $9.00 per linear foot.1. Assume you are the manager of the Cabinetry Division. Determine the maximum amount you would pay for lumber.2. Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have excess capacity. Repeat assuming you have no excess capacity.
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 5PA: Product pricing and profit analysis with bottleneck operations Hercules Steel Company produces three...
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Lumber and Cabinetry. The Lumber Division is responsible for harvesting and preparing lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The lumber produced by the Lumber Division has a variable cost of $3.00 per linear foot and full cost of $4.00. Comparable quality wood sells on the open market for $9.00 per linear foot.
1. Assume you are the manager of the Cabinetry Division. Determine the maximum amount you would pay for lumber.
2. Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have excess capacity. Repeat assuming you have no excess capacity.
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