Question
20. The Big Bear Lumber Company is trying to decide whether to sell or process further rough-sawn lumber. The joint cost of producing the rough-sawn
20. The Big Bear Lumber Company is trying to decide whether to sell or process further rough-sawn lumber. The joint cost of producing the rough-sawn lumber is $10,500. The following data are available: (2 points)
|
Lumber Type |
Number of Boards |
Selling Price per Board | Incremental Cost to Process Further | |
|
|
|
At Split-Off | After Additional Processing |
|
| A | 2,000 | $ 8 | $12 | $7,000 |
| B | 1,000 | 16 | 20 | 6,000 |
| C | 500 | 25 | 30 | 1,000 |
a. What is the incremental effect, increase or (decrease), on operating income of processing the lumber further?
b. Which type of lumber should be processed further?
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The Organisation Shadow Side Audit
Authors: W Tate
1st Edition
1902433971, 978-1902433974
