Calgary Lumber Company incurs a cost of $370 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $542 per hbf. An alternative is to produce a “finished-cut” at a total processing cost of $526 per hbf, which can be sold for $754 per hbf.a. Prepare a differential analysis dated March 15 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).Differential AnalysisSell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2)March 15 SellRough-Cut(Alternative 1)Process Furtherinto Finished-Cut(Alternative 2)DifferentialEffects(Alternative 2)Revenues, per 100 board ft.$$$Costs, per 100 board ft. Profit (Loss), per 100 board ft.$$$b. Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

Differential analysis:Differential analysis refers to the analysis of differential revenue that…

Answered: Calgary Lumber Company incurs a cost of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Calgary Lumber Company incurs a cost of $370 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $542 per hbf. An alternative is to produce a “finished-cut” at a total processing cost of $526 per hbf, which can be sold for $754 per hbf.

a. Prepare a differential analysis dated March 15 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)
March 15
	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.	$	$	$

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

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