Problem 4 (Textbook Re fe renee: P6-5)- Decide whe ther to process further or sell joint products Sierra Lumber Company produces lumber. The company has two grades of lumber at the split-off point, A and B. Grade A sells for $4 per board foot and Grade B sels for $2 per board foot. This lumber is suitable for framing and most exterio work but no for the interior of buildings. Either grade can be further processed to make it suitable for interior work at a cost of S1.20 per board foot. After this further processing, the firm can sell Grade A lumber for $5.50 per board foot and Grade B for $3.00 per board foor. Required: Woukd you recommend the company sell the lumber at the split-off point or process it further to make it suitable for interior work? Explain and give supporting computations. Hint: Utilize the table below to help you reach a conclusion SIERRA LUMBER COMPANY Grade A Grade B Difrential Revenue of Further Processing One Board Foot of Lumber Differential Costs of Further Processing One Board Foot of Lumber Net Advantage (disadvantage) of Further Processi * Sierra Lumbershould process Grade A further since the additional revenuegenerated after processing is greater than the additional costs. Grade B should not be processed further because the additional costs are greater than the additional revenues