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Nova Scotia Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw lumber division: $125 per 100
Nova Scotia Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw lumber division: $125 per 100 board-feet of raw lumber Finished lumber division: $150 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 $225 per 100 board-feet. Finished lumber can be sold at $250 per 100 board-feet. Read the requirements. Requirement 1. Should Nova Scotia Lumber process raw lumber into its finished form? 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.) Incremental revenues Incremental costs Gain/(loss) on further processing -125 Requirements Base Reqy opere Expld Le its division Whole? Begir (Roul signy 1. Should Nova Scotia Lumber process raw lumber into its finished form? Show your calculations. 2. Assume that internal transfers are made at 125% of variable cost. Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of Nova Scotia Lumber as a whole? Explain. 3. 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 Nova Scotia Lumber as a whole? Explain. W lumber or a minus Raw Div Print Done Div Div
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