Sell or Process Further

Bunyon Lumber Company incurs a cost of $382 per hundred board feet in processing certain "rough-cut" lumber, which it sells for $542 per hundred board feet. An alternative is to produce a "finished cut" at a total processing cost of $528 per hundred board feet, which can be sold for $768 per hundred board feet.

a. Prepare a differential analysis dated March 4, 2014, on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

Differential Analysis
Sell Rough Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2)
March 4, 2014
		Sell Rough Cut (Alternative 1)		Process Further into Finished Cut (Alternative 2)		Differential Effect on Income (Alternative 2)
Revenues, per 100 board ft.		$		$		$
Costs, per 100 board ft.
Income (Loss), per 100 board ft.		$		$		$