Figure 6-6
Suppose That a Sawmill Processes Logs into Four

question 7

Multiple Choice

Figure 6-6
Suppose that a sawmill processes logs into four grades of lumber totaling 500,000 board feet as follows at a joint cost of £300,000: $$\begin{array} { l c c } \text { Grade } & \text { Board Feet } & \text { Final Sales Value } \\\text { First and second } & 75,000 & £ 56,250 \\\text { No. } 1 \text { common } & 200,000 & 180,000 \\\text { No. } 2 \text { common } & 100,000 & 105,000 \\\text { No. } 3 \text { common } & 125,000 & 127,500\end{array}$$
-Refer to Figure 6-6. No. 2 common can be cut into 2 * 4s. The final sales value will increase to £150,000. The cost of cutting No. 2 common is £15,000. Should the No. 2s be cut into 2 *4s?

• A)Sell now.
• B)Cut into 2 *4s; profits will increase £30,000.
• C)Cut into 2 *4s; profits will increase £45,000.
• D)Cut into 2 * 4s; profits will increase £150,000.

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Definitions:

Bankruptcy

A legal proceeding involving a person or business that is unable to repay outstanding debts. The process begins with a petition filed by the debtor or on behalf of creditors.

Top Management

The highest level of managers and executives in an organization who are responsible for making overarching decisions and establishing policies.

Legal But Unethical

Refers to actions or practices that, while not violating laws, are considered morally wrong by society or professional standards.

Minimum Wage

The lowest legal hourly, daily, or monthly remuneration that employers may pay their workers.