Sell or Process Further

Calgary Lumber Company incurs a cost of $400 per hundred board feet (hbf) in processing certain rough-cut lumber, which it sells for $564 per hbf. An alternative is to produce a finished cut at a total processing cost of $521 per hbf, which can be sold for $748 per hbf.

Question Content Area

a. Prepare a differential analysis dated March 15, 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 15

	Sell-Rough-Cut (Alternative 1)	Process Further into Finished-Cut (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues, per unit	$fill in the blank bcc260f2dfcc064_1	$fill in the blank bcc260f2dfcc064_2	$fill in the blank bcc260f2dfcc064_3
Costs, per unit	fill in the blank bcc260f2dfcc064_4	fill in the blank bcc260f2dfcc064_5	fill in the blank bcc260f2dfcc064_6
Income (Loss), per unit	$fill in the blank bcc260f2dfcc064_7	$fill in the blank bcc260f2dfcc064_8	$fill in the blank bcc260f2dfcc064_9

Question Content Area

b. Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

Sell rough-cut lumber.Process further and sell finished-cut lumber.