Sell or Process FurtherCalgary Lumber Company incurs a cost of $388 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $550 per hbf. An alternative is to produce a “finished cut” at a total processing cost of $520 per hbf, which can be sold for $748 per hbf.a. Prepare a differential analysis dated March 15, on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).Differential AnalysisSell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2)March 15 Sell Rough-Cut(Alternative 1)Process Furtherinto Finished-Cut(Alternative 2)DifferentialEffect on Income(Alternative 2)Revenues, per unit$fill in the blank f0f0a4fd6062f85_1$fill in the blank f0f0a4fd6062f85_2$fill in the blank f0f0a4fd6062f85_3Costs, per unitfill in the blank f0f0a4fd6062f85_4fill in the blank f0f0a4fd6062f85_5fill in the blank f0f0a4fd6062f85_6Income (Loss), per unit$fill in the blank f0f0a4fd6062f85_7$fill in the blank f0f0a4fd6062f85_8$fill in the blank f0f0a4fd6062f85_9b. Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

If processing further into finished-cut lumber results in income, then the company should process into finished-cut lumber. If processing further into finished-cut results in loss, then the company should sell rough-cut lumber.b) As further processing results in income of $66 per unit, The company should further process into finished-cut lumber (Alternative 2).

Answered: Calgary Lumber Company incurs a cost of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Sell or Process Further

Calgary Lumber Company incurs a cost of $388 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $550 per hbf. An alternative is to produce a “finished cut” at a total processing cost of $520 per hbf, which can be sold for $748 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 Effect on Income (Alternative 2)
Revenues, per unit	$fill in the blank f0f0a4fd6062f85_1	$fill in the blank f0f0a4fd6062f85_2	$fill in the blank f0f0a4fd6062f85_3
Costs, per unit	fill in the blank f0f0a4fd6062f85_4	fill in the blank f0f0a4fd6062f85_5	fill in the blank f0f0a4fd6062f85_6
Income (Loss), per unit	$fill in the blank f0f0a4fd6062f85_7	$fill in the blank f0f0a4fd6062f85_8	$fill in the blank f0f0a4fd6062f85_9

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

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