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British Columbia Lumber has a raw lumber division and a finished lumber division. The variable...

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Accounting

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British Columbia Lumber has a raw lumber division and a finished lumber division. The variable costs are: Raw lumber division: $100 per 100 board feet of raw lumber. Finished lumber division: $125 per 100 board feet of finished lumber. Assume that no board feet are lost in processing raw lumber into finished lumber. Raw lumber can be sold at $200 per 100 board feet. Finished lumber can be sold at $275 per 100 board feet. Required 1. Should British Columbia Lumber process raw lunber into its finished farm? Show your calculations. 2. Assume that internal transfers are made at 110% of variable cost Will each division maximize its division operating income contribution by adopting the action that is in the best interests of British Columbia Lumber as a whole? Explain. 3. Assume that internal transfers are made at market prices. Will each division maximize its division operating-income contribution by adopting the action that is in the best interests of British Columbia Lumber as a whole? Explain

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