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The Lumber Division of Coronado Industries produces and sells lumber that can be sold to outside customers or within the company to the Construction Division.
The Lumber Division of Coronado Industries produces and sells lumber that can be sold to outside customers or within the company to the Construction Division. The following data have been gathered for the coming period: Lumber Division: 260000 board feet $4.50 Capacity Price per board foot Variable production cost per bd. ft. $1.25 Variable selling cost per bd. ft. $0.50 Construction Division: 65000 Board feet needed Outside price paid per bd. ft.$3 If the Lumber Division sells to the Construction Division, $0.45 per board foot can be saved in shipping costs. If the Lumber Division has sufficient excess capacity to fulfill the Construction Division's needs, what will be the effect on the company's overall contribution margin? Increase by $39000 Decrease by $32500 Decrease by $149500 Increase by $110500
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