Sell or Process Further Calgary Lumber Company incurs a cost of $394 per hundred board...
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Accounting
Sell or Process Further
Calgary Lumber Company incurs a cost of $394 per hundred board feet (hbf) in processing certain rough-cut lumber, which it sells for $570 per hbf. An alternative is to produce a finished cut at a total processing cost of $523 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 Effect on Income (Alternative 2) | |
| Revenues, per unit | $ | $ | $ |
| Costs, per unit | |||
| Income (Loss), per unit | $ | $ | $ |
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