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The Lumber Division of Sheridan Company produces and sells lumber that can be sold to outside customers or within the company to the Construction
The Lumber Division of Sheridan Company 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: Capacity 250000 board feet Price per board foot $5.50 Variable production cost per bd. ft. $1.25 Variable selling cost per bd. ft. $0.50 Construction Division: Board feet needed 70000 Outside price paid per bd. ft. $5.00 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? Decrease by $231000 Decrease by $35000 Increase by $259000 Increase by $42000
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