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Transfer-pricing methods, goal congruence. British Columbia Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw lumber

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Transfer-pricing methods, goal congruence. British Columbia Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw lumber division: 100 dollars per 100 board-feet of raw lumber Finished lumber division: 125 dollars per 100 board-feet of finished lumber Assume that there is no board-feet loss in processing raw lumber into finished lumber. Raw lumber can be sold at 200 dollars per 100 board-feet. Finished lumber can be sold at 275 dollars per 100 board-feet. Should British Columbia Lumber process raw lumber into its finished form? Show your calculations. Assume that internal transfers are made at 110% of variable cost. Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of British Columbia Lumber as a whole? Explain. Assume that internal transfers are made at market prices. Will each division maximize its division operating-income contribution by adopting the action that is in the best interest of British Columbia Lumber as a whole? Explain

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