Sell or Process Further Big Fork Lumber Company incurs a cost of $402 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $540 per hbf. An alternative is to produce a “finished cut” at a total processing cost of $523 per hbf, which can be sold for $668 per hbf. Prepare a differential analysis dated August 9 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Rough-Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2) August 9 Sell Rough-Cut (Alternative 1) Process Further into Finished Cut (Alternative 2) Differential Effect on Income (Alternative 2) Revenues, per 100 board ft. $fill in the blank c1acfff9703403c_1 $fill in the blank c1acfff9703403c_2 $fill in the blank c1acfff9703403c_3 Costs, per 100 board ft. fill in the blank c1acfff9703403c_4 fill in the blank c1acfff9703403c_5 fill in the blank c1acfff9703403c_6 Income (Loss), per 100 board ft. $fill in the blank c1acfff9703403c_7 $fill in the blank c1acfff9703403c_8 $fill in the blank c1acfff9703403c_9 Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

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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Sell or Process Further

Big Fork Lumber Company incurs a cost of $402 per hundred board feet (hbf) in processing certain “rough-cut” lumber, which it sells for $540 per hbf. An alternative is to produce a “finished cut” at a total processing cost of $523 per hbf, which can be sold for $668 per hbf.

Prepare a differential analysis dated August 9 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Sell Rough-Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2)
August 9
	Sell Rough-Cut (Alternative 1)	Process Further into Finished Cut (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues, per 100 board ft.	$fill in the blank c1acfff9703403c_1	$fill in the blank c1acfff9703403c_2	$fill in the blank c1acfff9703403c_3
Costs, per 100 board ft.	fill in the blank c1acfff9703403c_4	fill in the blank c1acfff9703403c_5	fill in the blank c1acfff9703403c_6
Income (Loss), per 100 board ft.	$fill in the blank c1acfff9703403c_7	$fill in the blank c1acfff9703403c_8	$fill in the blank c1acfff9703403c_9

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

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