Use the following information for questions
Paul Bunyon Lumber Co. produces several products that can be sold at the split-off point or processed further and then sold. The following results are from a recent period: $\begin{array}{lrrr}& \text { Sales Value } & \text { Additional } & \text { Sales Value after } \
\text { Product } & \text { at Split-off } & \text { Variable Costs } & \text { FurtherProcessing }\
\text { Green lumber } & \$ 159,600 & \$ 24,000 & \$ 178,000 \
\text { Rough lumber } & 124,000 & 28,200 & 173,600 \
\text { Sawdust } & 102,000 & 19,600 & 130,000
\end{array}$
-What is the increase in profit if the appropriate products are processed further?
A) $24,200
B) $29,800
C) $96,000
D) $255,800

Question

Use the following information for questions 
Paul Bunyon Lumber Co. produces several products that can be sold at the split-off point or processed further and then sold. The following results are from a recent period: $\begin{array}{lrrr}& \text { Sales Value } & \text { Additional } & \text { Sales Value after } \
\text { Product } & \text { at Split-off } & \text { Variable Costs } & \text { FurtherProcessing }\
\text { Green lumber } & \$ 159,600 & \$ 24,000 & \$ 178,000 \
\text { Rough lumber } & 124,000 & 28,200 & 173,600 \
\text { Sawdust } & 102,000 & 19,600 & 130,000
\end{array}$
-What is the increase in profit if the appropriate products are processed further?
A) $24,200
B) $29,800
C) $96,000
D) $255,800

Quizplus · Accepted Answer

To determine the increase in profit if the appropriate products are processed further, we calculate the net benefit of processing each product further by subtracting the additional variable costs from the increase in sales value after further processing. If the result is positive, it is beneficial to process the product further.1. Green lumber: $ \$178,000 - \$159,600 - \$24,000 = -\$5,600 $ (Not beneficial to process further)2. Rough lumber: $ \$173,600 - \$124,000 - \$28,200 = \$21,400 $ (Beneficial to process further)3. Sawdust: $ \$130,000 - \$102,000 - \$19,600 = \$8,400 $ (Beneficial to process further)Adding the beneficial increases together: $ \$21,400 + \$8,400 = \$29,800 $Thus, the increase in profit from processing the appropriate products further is $29,800.

Use the Following Information for Questions Paul Bunyon Lumber

Use the Following Information for Questions
Paul Bunyon Lumber