Calgary Lumber Company incurs a cost of $460 per hundred board feet (hbf) in processing certain rough-cut lumber, which it sells for $607 per hbf. An alternative is to produce a finished cut at a total processing cost of $543 per hbf, which can be sold for $725 per hbf.

Required:

1.

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). Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

2.

Determine whether the company should sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

Calgary Lumber Company incurs a cost of $460 per hundred board feet (hbf) in processing certain rough-cut lumber, which it sells for $607 per hbf. An alternative is to produce a finished cut at a total processing cost of $543 per hbf, which can be sold for $725 per hbf.

	Required:
1.	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). Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
2.	Determine whether the company should sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

X

Amount Descriptions

Amount Descriptions
Costs, per unit
Income (loss), per unit
Revenues, per unit

X

Differential Analysis

Shaded cells have feedback.

1. 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). Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Question not attempted.

Score: 0/51

Differential Analysis

Sell Rough Cut (Alternative 1) or Process Further into Finished Cut (Alternative 2)

March 15

1		Sell Rough-Cut	Process Further into Finished-Cut	Differential Effect on Income
2		(Alternative 1)	(Alternative 2)	(Alternative 2)

Toyota Motor Corporation uses target costing. Assume that Toyota marketing personnel estimate that the competitive selling price for the Camry in the upcoming model year will need to be $24,000. Assume further that the Camry's total unit cost for the upcoming model year is estimated to be $19,600 and that Toyota requires a 20% profit margin on selling price (which is equivalent to a 25% markup on total cost).

a. What price will Toyota establish for the Camry for the upcoming model year? $