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#4 Sell or Process Further Calgary Lumber Company incurs a cost of $384 per hundred board feet (hbf) in processing certain rough-cut lumber, which it

#4

Sell or Process Further

Calgary Lumber Company incurs a cost of $384 per hundred board feet (hbf) in processing certain rough-cut lumber, which it sells for $554 per hbf. An alternative is to produce a finished cut at a total processing cost of $524 per hbf, which can be sold for $780 per hbf.

a. Prepare a differential analysis dated March 15, on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

Differential Analysis
Sell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2)
March 15
Sell-Rough-Cut (Alternative 1) Process Further into Finished-Cut (Alternative 2) Differential Effect on Income (Alternative 2)
Revenues, per unit $ $ $
Costs, per unit
Income (Loss), per unit $ $ $

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