Northern Lumber Company incurs a cost of $388 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $554 per hbf. An alternative is to produce a "finished-cut" at a total processing cost of $526 per hbf, which can be sold for $758 per hbf. 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 Analysis Sell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2) April 21 Line Item Description Revenues, per 100 board ft. Costs, per 100 board ft. Profit (Loss), per 100 board ft. Process Further Sell Rough-Cut into Finished-Cut (Alternative 1) (Alternative 2) Differential Effects (Alternative 2)
Northern Lumber Company incurs a cost of $388 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $554 per hbf. An alternative is to produce a "finished-cut" at a total processing cost of $526 per hbf, which can be sold for $758 per hbf. 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 Analysis Sell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2) April 21 Line Item Description Revenues, per 100 board ft. Costs, per 100 board ft. Profit (Loss), per 100 board ft. Process Further Sell Rough-Cut into Finished-Cut (Alternative 1) (Alternative 2) Differential Effects (Alternative 2)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Po.9.
Transcribed Image Text:Sell or Process Further
Northern Lumber Company incurs a cost of $388 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $554
per hbf. An alternative is to produce a "finished-cut" at a total processing cost of $526 per hbf, which can be sold for $758 per hbf.
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 Analysis
Sell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2)
April 21
Line Item Description
Revenues, per 100 board ft.
Costs, per 100 board ft.
Profit (Loss), per 100 board ft.
Sell Rough-Cut
(Alternative 1)
$
Process Further
into Finished-Cut
(Alternative 2)
Differential Effects
(Alternative 2)
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