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Requirements 1. Should Washington Lumber process raw lumber into its finished form? Show your calculations. 2. Assume that internal transfers are made at 125% of
Requirements 1. Should Washington 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 Washington 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 Washington Lumber as a whole? Explain. Washington Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: . Raw lumber division: $150 per 100 board-feet of raw lumber . Finished lumber division: $190 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 $275 per 100 board-feet. Finished lumber can be sold at $340 per 100 board-feet. Read the equirementsRequirement 1. Should Washington 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.) - = Gain/(loss) on further processing Based on above, Washington Lumber V process raw lumber into its finished form. Requirement 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 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 Sell as raw lumber finished lumber Sell as raw lumber Sell as finished lumber Raw iumber division: Division revenues Division variable costs Division operating income (loss) Finished lumber division: Division revenues Transferred-in costs Division variable costs Division operating income (loss) 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 Washington Lumber as a whole? Explain. The raw lumber division will maximize reported division operating income by V , which V the action preferred by the company as a whole. The finished lumber division will maximize division operating income by V , which V the action preferred by the company as a whole. Requirement 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 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. (Enter a \"0" for amounts with a zero value. Use parentheses or a minus sign when entering losses.) Sell as Sell as raw lumber nished lumber Raw lumber division: Division revenues Division variable costs Division operating income (loss) Finished lumber division: niuiz-inn munm mo 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 Washington Lumber as a whole? Explain. The raw lumber division will maximize reported division operating income by V , which V the action preferred by the company as a whole. The finished lumber division will maximize division operating income by V , which V the action preferred by the company as a whole
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