Question
In: Accounting
Woody, Inc. processes wooden logs into boards and sawdust. A wooden log costs $10 to buy...
Woody, Inc. processes wooden logs into boards and sawdust. A wooden log costs $10 to buy from log cutters and $6 to process to the splitoff point. The boards can be sold at the splitoff point for $12 or processed further for $10 to make a finished board that is sold for $18. The saw dust can be sold at the splitoff point for $5 or processed further for $3 to make wood pellets (used in wood-burning heaters) that is sold for $10. What is the financial advantage (disadvantage) for the company from processing the sawdust into wood pellets rather than selling it as is?
Multiple Choice
-
$(14)
-
$2
-
$(4)
-
$(2)
Solutions
Expert Solution
$2
| Sold at Split off | Processed further | Advantage | |
| Selling price | $ 5 | $ 10 | |
| Less - Cost for processing | $ - | $ (3) | |
| Net Income | $ 5 | $ 7 | $ 2 |
ekkarill92 answered 2 years agoRelated Solutions
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