ell or Process Further Northern Lumber Company incurs a cost of $372 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $548 per hbf. An alternative is to produce a “finished-cut” at a total processing cost of $522 per hbf, which can be sold for $752 per hbf. Question Content Area a. Prepare a differential analysis dated April 21 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)April 21 Line Item Description Sell Rough-Cut (Alternative 1) Process Further into Finished-Cut (Alternative 2) Differential Effects (Alternative 2) Revenues, per 100 board ft. $Revenues, per 100 board ft. $Revenues, per 100 board ft. $Revenues, per 100 board ft. Costs, per 100 board ft. Costs, per 100 board ft. Costs, per 100 board ft. Costs, per 100 board ft. Profit (Loss), per 100 board ft. $Profit (Loss), per 100 board ft. $Profit (Loss), per 100 board ft. $Profit (Loss), per 100 board ft.
ell or Process Further Northern Lumber Company incurs a cost of $372 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $548 per hbf. An alternative is to produce a “finished-cut” at a total processing cost of $522 per hbf, which can be sold for $752 per hbf. Question Content Area a. Prepare a differential analysis dated April 21 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)April 21 Line Item Description Sell Rough-Cut (Alternative 1) Process Further into Finished-Cut (Alternative 2) Differential Effects (Alternative 2) Revenues, per 100 board ft. $Revenues, per 100 board ft. $Revenues, per 100 board ft. $Revenues, per 100 board ft. Costs, per 100 board ft. Costs, per 100 board ft. Costs, per 100 board ft. Costs, per 100 board ft. Profit (Loss), per 100 board ft. $Profit (Loss), per 100 board ft. $Profit (Loss), per 100 board ft. $Profit (Loss), per 100 board ft.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sell or Process Further
Northern Lumber Company incurs a cost of $372 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $548 per hbf. An alternative is to produce a “finished-cut” at a total
Question Content Area
a. Prepare a differential analysis dated April 21 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).
| Line Item Description | Sell Rough-Cut (Alternative 1) |
Process Further into Finished-Cut (Alternative 2) |
Differential Effects (Alternative 2) |
|---|---|---|---|
| Revenues, per 100 board ft. | $Revenues, per 100 board ft. | $Revenues, per 100 board ft. | $Revenues, per 100 board ft. |
| Costs, per 100 board ft. | Costs, per 100 board ft. | Costs, per 100 board ft. | Costs, per 100 board ft. |
| $Profit (Loss), per 100 board ft. | $Profit (Loss), per 100 board ft. | $Profit (Loss), per 100 board ft. |
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