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per hbf, which can Ianalysis dated Ma Different (Alt. 1) or Proce: Ma Se Rough

per hbf, which can Ianalysis dated Ma Different (Alt. 1) or Proce: Ma Se Rough

FINANCIAL ACCOUNTING
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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Diff Analysis & Product Pricing:

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 $558 per hbf. An alternative is to produce a "finished-cut" at a total processing cost of $530 per hbf, which can be sold for $768 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 Process Further Differential Rough-Cut into Finished-Cut Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues, per 100 board ft. $ Costs, per 100 board ft. Profit (Loss), per 100 board ft. $
Transcribed Image Text: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 $558 per hbf. An alternative is to produce a "finished-cut" at a total processing cost of $530 per hbf, which can be sold for $768 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 Process Further Differential Rough-Cut into Finished-Cut Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues, per 100 board ft. $ Costs, per 100 board ft. Profit (Loss), per 100 board ft. $
Expert Solution
Step 1

  Differential  analysis  is selecing most profitable  alternative or comparing  opportunity  costs  of alternatives .

  In the above  example  we will  compare two alternatives  and will calculate theopportunity cost of not going for alternative no. 2.

 please  refer  step 2-----

  

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