Donder Milling Company Purchases Logs and Mills Them into Various

question 73

Multiple Choice

Donder Milling Company purchases logs and mills them into various grades of lumber. During the sawing and planning process, a considerable amount of sawdust is generated. Currently, Donder sells the sawdust to a particle board manufacturer for $50 per truckload. Donder is considering processing the sawdust into particle board itself. One truckload of sawdust can be made into 20 sheets of particle board selling for $8 per sheet. Further processing costs are $7 per board.
-Refer to the Figure.Should Donder process the sawdust into particle board,and what would be the effect on income?

• A)No, income will decrease by $50 per truckload of sawdust.
• B)No, income will decrease by $30 per truckload of sawdust.
• C)Yes, income will increase by $20 per truckload of sawdust.
• D)Yes, income will increase by $50 per truckload of sawdust.

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