Bunyon Lumber Company incurs a cost of $372 per hundred board feet in processing
ID: 2580286 • Letter: B
Question
Bunyon Lumber Company incurs a cost of $372 per hundred board feet in processing certain "rough-cut" lumber, which it sells for $570 per hundred board feet. An alternative is to produce a "finished cut" at a total processing cost of $522 per hundred board feet, which can be sold for $780 per hundred board feet.
a. Prepare a differential analysis dated March 4, 2014, 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 4, 2014
Sell Rough Cut (Alternative 1)
Process Further into Finished Cut (Alternative 2)
Differential Effect on Income (Alternative 2)
Revenues, per 100 board ft.
$
$
$
Costs, per 100 board ft.
Income (Loss), per 100 board ft.
$
$
$
Differential Analysis
Sell Rough Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2)
March 4, 2014
Sell Rough Cut (Alternative 1)
Process Further into Finished Cut (Alternative 2)
Differential Effect on Income (Alternative 2)
Revenues, per 100 board ft.
$
$
$
Costs, per 100 board ft.
Income (Loss), per 100 board ft.
$
$
$
Explanation / Answer
Process further into finished-cut lumber (Alternative 2). Dear Student Differential Analysis Thank you for using Chegg Please find below the answer and please give thumbs up Sell Rough Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2) Statementshowing Computations March 4, 2014 Paticulars Sell Rough Cut (Alternative 1) Process Further into Finished Cut (Alternative 2) Differential Effect on Income (Alternative 2) Revenues, per 100 board ft. 570.00 780.00 210.00 Costs, per 100 board ft. 372.00 522.00 150.00 Income (Loss), per 100 board ft. 198.00 258.00 60.00
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