FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Sell or Process Further

Bunyon Lumber Company incurs a cost of $398 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $562 per hbf. An alternative is to produce a "finished cut" at a total processing cost of $522 per hbf, which can be sold for $754 per hbf.

Prepare a differential analysis dated August 9 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis
Sell Rough-Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2)
August 9
  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. $ $ $

Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2).
 

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