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I'm stuck on the second requirement 2 here, I've tried the numbers that you see as well as 345 and 170 as revenues and variable
I'm stuck on the second requirement 2 here, I've tried the numbers that you see as well as 345 and 170 as revenues and variable costs respectively and they were wrong. Thank you ahead of time for your help!
Washington Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw lumber division: $130 per 100 board-feet of raw lumber Finished lumber division: $170 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 $205 per 100 board-feet. Finished lumber can be sold at $345 per 100 board-feet. Read the requirements. 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.) Incremental revenues Incremental costs Gain/(loss) on further processing $ (30) $ 140 $ 170 Based on above, Washington Lumber should not process raw lumber into its finished form. Requirement 2. Assume that internal transfers are made at 130% of variable cost. Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of Washington 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 "0" for amounts with a zero value. Use parentheses or a minus sign when entering losses.) Sell as raw lumber Requirements Raw lumber division: Division revenues $ 205 130 Division variable costs 1. $ 75 Division operating income (loss) 2. Should Washington Lumber process raw lumber into its finished form? Show your calculations. Assume that internal transfers are made at 130% of variable cost. Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of Washington 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 Washington Lumber as a whole? Explain. Finished lumber division: 3. Division revenues 169 Transferred-in costs 0 130 Division variable costs Print Done 39 Division operating income (loss)Step by Step Solution
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