Answered: Sell or Process Further Jackson Lumber…

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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Sell or Process Further

Jackson Lumber Company incurs a cost of $374 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $558 per hbf. An alternative is to produce a "finished cut" at a total processing cost of $525 per hbf, which can be sold for $774 per hbf.

Prepare a differential analysis dated August 9 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Sell or Process Further
Jackson Lumber Company incurs a cost of $374 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $558 per hbf. An alternative is to
produce a "finished cut" at a total processing cost of $525 per hbf, which can be sold for $774 per hbf.
Prepare a differential analysis dated August 9 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). For those
boxes in which you must enter subtracted or negative numbers use a minus sign.
Differential Analysis
Sell Rough-Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2)
August 9
Process
Differential
Sell
Further into
Effect
Rough-Cut
Finished Cut
on Income
(Alternative 1)
(Alternative 2) (Alternative 2)
Revenues, per 100 board ft.
Costs, per 100 board ft.
Income (Loss), per 100 board ft. $
Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

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