Sell or Process Further Northern Lumber Company incurs a cost of $398 per hundred board feet...

Transcribed Image Text:

Sell or Process Further Northern Lumber Company incurs a cost of $398 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 $530 per hbf, which can be sold for $746 per hbf. a. Prepare a differential analysis dated April 21 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) April 21 Line Item Description Sell Rough-Cut (Alternative 1) Revenues, per 100 board ft. Costs, per 100 board ft. Process Further into Finished-Cut (Alternative 2) Differential Effects (Alternative 2) Profit (Loss), per 100 board ft. Sell or Process Further Northern Lumber Company incurs a cost of $398 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 $530 per hbf, which can be sold for $746 per hbf. a. Prepare a differential analysis dated April 21 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) April 21 Line Item Description Sell Rough-Cut (Alternative 1) Revenues, per 100 board ft. Costs, per 100 board ft. Process Further into Finished-Cut (Alternative 2) Differential Effects (Alternative 2) Profit (Loss), per 100 board ft.