Sierra Lumber Company produces lumber. The company has two grades of lumber at the split-off point,...
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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 sells for $3 per board foot. This lumber is suitable for framing and most exterior work but not for the interior of buildings. Either grade can be processed further to make it suitable for interior work. If Grade A is processed further, we could sell the interior grade A lumber for $5.1 per board foot with an additional processing cost of $1.6 per board foot If Grade B is processed further, we could sell the interior grade B lumber for $4.6 per board foot with an additional processing cost of $1 per board foot Required: Would you recommend the company sell the either grade of lumber as is for exterior work or process it further to make it suitable for interior work? Explain and give supporting calculations. 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 sells for $3 per board foot. This lumber is suitable for framing and most exterior work but not for the interior of buildings. Either grade can be processed further to make it suitable for interior work. If Grade A is processed further, we could sell the interior grade A lumber for $5.1 per board foot with an additional processing cost of $1.6 per board foot If Grade B is processed further, we could sell the interior grade B lumber for $4.6 per board foot with an additional processing cost of $1 per board foot Required: Would you recommend the company sell the either grade of lumber as is for exterior work or process it further to make it suitable for interior work? Explain and give supporting calculations.
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Related Book For
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn
Posted Date:
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