Sell or Process Further

Timberland Lumber Company incurs a cost of $382 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $570 per hbf. An alternative is to produce a "finished cut" at a total processing cost of $523 per hbf, which can be sold for $752 per hbf.

Question Content Area

Prepare a differential analysis dated August 9 on whether to Sell Rough Cut (Alternative 1) or Process Further into Finished Cut (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis Sell Rough Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2) August 9

	Sell Rough Cut (Alternative 1)	Process Further into Finished Cut (Alternative 2)	Differential Effects (Alternative 2)
Revenues, per 100 board ft.	$____________	$____________	$____________
Costs, per 100 board ft.	$____________	$____________	$____________
Profit (loss), per 100 board ft.	$____________	$____________	$____________

Question Content Area

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

Sell rough cut lumber OR Process further and sell finished cut lumber