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: $\begin{array}{lrrr}& \text { Sales Value } & \text { Additional } & \text { Sales Value after } \
\text { Product } & \text { at Split-off } & \text { Variable Costs } & \text { Further Processing } \
\hline
\text { Green lumber } & \$ 159,600 & \$ 24,000 & \$ 178,000 \
\text { Rough lumber } & 124,000 & 28,200 & 173,600 \
\text { Sawdust } & 102,000 & 19,600 & 130,000
\end{array}$
- What is the increase in profit if the appropriate products are processed further?

Question

Quizplus · Accepted Answer

The increase in profit is the difference between the sales value after further processing and the sales value at the split-off point, minus the additional variable costs. For green lumber, the increase in profit is $178,000 - $159,600 - $24,000 = $24,200. For rough lumber, the increase in profit is $173,600 - $124,000 - $28,200 = $21,400. For sawdust, the increase in profit is $130,000 - $102,000 - $19,600 = $8,400. The total increase in profit is $24,200 + $21,400 + $8,400 = $54,000.

Paul Bunyon Lumber Co - What Is the Increase in Profit If the Appropriate