Edmonton Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw lumber division: $120 per 100 board-feet of raw lumber . Finished lumber division: $145 per 100 board-feet of finished lumber Assume that there is no board-leet loss in processing raw lumber into finished lurriber. Raw lumber can be sold at $220 per 100 board-leet. Finished lumber can be sold at $245 per 100 board-feel. Read the requirement The raw lumber division will maximize reported division operating income by which the action preferred by the company as a whole. The finished lumber division will maximize division operating income by which V the action preferred by the company as a whole. Requirement 3. Assume that internal transfers are made market prices. Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of Edmonton Lumber as a whole? Explain. Begin by calculating each division's operating income under both actions. Start with the decision to sell as raw lumber. (Enter a "O" for amounts with a zero value. Use parentheses or a minus sign when entering losses.) Sell as Sell as raw lumber finished lumber Raw lumber division: Division revenues Division variable costs Division operating income (los) Finished lumber division: Division revenues Transferred-in costs Division variable costs Division operating income (loss) Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of Edmonton Lurriber as a whole? Explain. The raw lumber division will maximize reported division operating income by , which the action preferred by the company as a whole. The finished lumber division will maximize division operating income by , which the action preferred by the company as a whole. Edmonton Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw Turnber division: $120 per 100 board-feet of raw lurriber Finished lumber division: $145 per 100 board-feet of finished lumber Assume that there is no board-feet loss in processing raw lumber into finished lumber. Raw lumber can be sold at $220 per 100 board-feet. Finished lumber can be sold at $245 per 100 board-feet. Read the requirements. Requirement 1. Should Edmonton Lumber process raw lumber into its finished for? Show your calculations Begin by selecting the formula you will use to make your decision. Then enter the amounts in the formula. (Use parentheses or a minus sign when entering losses.) Gain/loss) on further processing Based on above, Edmonton Lumber process raw lumber into its finished form. Requirement 2. Assume that internal transfers are made at 110% of variable cost. Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of Edmonton Lumber as a whole? Explain. Begin by calculating each division's operating income under both actions. Start with the decision to sell as raw lumber. (Round your answers to the nearest whole dollar. Enter a "O" for arounts with a zero value. Use parentheses or a minus sign when entering losses.) Sell as Sell as X Requirements raw lumber finished lumber Raw lumbur division Division revenues 1. Division variable costs 2. Division operating income (loss) Should Edmonton Lumber process raw lurnber into its finished forrn? Show your calculations. Assume that internal transfers are made at 110% of variable cost. Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of Edmonton Lumber as a whole? Explain. Assume that internal transfers are made at market prices. Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of Edmonton Lumber as a whole? Explain. 3. Finished lumber division Division revenues Transferred-in costs Division variable costs Print ) Done Division operating income (ons)
