Review the 'Real life' scenario and explain why process costing is likely to be suitable

for timber mills.

GREEN MILLING North Coast Sawmills Pty Ltd mills logs harvested from native forest areas and plantations in northern NSW into green. rough-sewn timber. WOOD PRESERVATION Hinterland Timber Processing Pty Ltd treats the timber to ensure wood preservation and protection from insects. Hinterland Timber Processing Pty Ltd dries the timber using a two part drying process air and kilnto reach optimum moisture content. PROCHSNG Following drying, Hinterland Timber Processing Pty Ltd moulds the timber into oorboards and decking. It is then graded as Select. Standard and Character according to Its number of features. Once the timber is packaged, it Is then ready for sale through Northern Rivers Timber Pty Ltd and delivered direct to customers. FROM TREES TO TIMBER Timber is a part of our daily lives. It exists in the oorboards that we walk on and the furniture that we use. It is an Integral part of almost every house built in Australia (and most other countries). Seventy per cent of the timber used in Australia is locally produced. Converting trees to timber usually involves a serles of repetitive processes such as those shown In this diagram, which describes the production processes for a company group in northern New South Wales. The starting point is when the trees are harvested and cut into rough-sawn timber. Hinterland Timber Processing Pty Ltd receives green rough sawn timber and produces packaged oorboards and decking for sale to Northern Rivers Timber Pty Ltd. This involves the processes of wood preservation. drying and processing (which. in turn, involves moulding, grading and packaging). With a single raw material and repetitive processes, Hinterland Timber is likely to be well suited to a process costing system