Pepin's Lumber Yard receives 8,000 large trees each period that it subsequently processes into rough logs which the company can sell (for use in log cabin construction) for a total of $500. Alternatively, the company can process the rough logs further into refined lumber (for use in regular construction framing), which produces 800 feet of lumber at an additional cost of $0.05 per foot and then sells for $0.75 per foot.
Required:
1. What is the contribution to income from selling the logs for log cabin construction?
2. What is the contribution to income from processing the logs into lumber?
3. Should Pepin's continue to sell the logs or process them further into lumber?