Portland Lumber Company incurs a cost of $452 per hundred board feet (hbf) in processing certain rough-cut lumber, which it sells for $611 per hbf. An alternative is to produce a finished cut at a total processing cost of $559 per hbf, which can be sold for $748 per hbf.

Required:

1.

Prepare a differential analysis dated June 14 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. If there is no amount or an amount is zero, enter 0. A colon (:) will automatically appear if required.

2.

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

Amount Descriptions

Costs, per 100 board ft.

Income (Loss), per 100 board ft.

Revenues, per 100 board ft.

1. Prepare a differential analysis dated June 14 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. If there is no amount or an amount is zero, enter 0. A colon (:) will automatically appear if required.

Differential Analysis

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

June 14

1		Sell Rough Cut	Process Further into Finished Cut	Differential Effect on Income
2		(Alternative 1)	(Alternative 2)	(Alternative 2)
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5				2. Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). Sell rough-cut lumber The company is indifferent since the result is the same regardless of which alternative is chosen. Process further and sell finished-cut lumber