Sell or Process FurtherCalgary Lumber Company incurs a cost of $382 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 $525 per hbf, which can be sold for $772 per hbf.a. Prepare a differential analysis dated March 15 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).Differential AnalysisSell Rough-Cut (Alt. 1) or Process Further into Finished-Cut (Alt. 2)March 15 Sell Rough-Cut(Alternative 1)Process Further into Finished-Cut(Alternative 2)Differential Effects(Alternative 2)Revenues, per 100 board ft.$fill in the blank $fill in the blank $fill in the blank Costs, per 100 board ft.fill in the blank fill in the blank fill in the blank Profit (Loss), per 100 board ft.$fill in the blank $fill in the blank$fill in the blank b. Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).

The following calculations are done for Calgary Company.

Answered: Sell or Process Further Calgary Lumber…

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

Calgary Lumber Company incurs a cost of $382 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 $525 per hbf, which can be sold for $772 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 Effects (Alternative 2)
Revenues, per 100 board ft.	$fill in the blank	$fill in the blank	$fill in the blank
Costs, per 100 board ft.	fill in the blank	fill in the blank	fill in the blank
Profit (Loss), per 100 board ft.	$fill in the blank	$fill in the blank	$fill in the blank

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

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