Sell or Process Further

Northern Lumber Company incurs a cost of $$380$ per hundred board feet $($hbf$)$ in processing certain "rough$-$cut" lumber, which it sells for $$566$ per hbf$.$ An alternative is to

produce a "finished$-$cut" at a total processing cost of $$525$ per hbf$,$ which can be sold for $$774$ per hbf$.$

a$.$ Prepare a differential analysis dated April $21$ 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$.2)$

April $21$

Line Item Description

Revenues, per $100$ board $ft.$

Costs, per $100$ board $ft.$

Profit $($Loss$),$ per $100$ board $ft.$

Sell Rough$-$Cut

$($Alternative $1)$

Process Further

into Finished$-$Cut

$($Alternative $2)$

Differential Effects

$($Alternative $2)$

$