Question

ABC Lumber spent $1,000 cutting down a tree. The result was 40 unfinished logs that sell for $20 each and 100 bags of sawdust that sell for $1.00 each. If the unfinished logs are processed into finished lumber at a cost of $8.00 each, they will sell for $35. A bag of sawdust can be processed into Presto Logs that sell for $0.25 each at a cost of $0.75 per bag. Which of the following statements are true concerning whether the logs should be processed into finished lumber and whether sawdust should be processed into Presto Logs?
A) Both logs and sawdust should be processed
B) The sawdust should be sold as is without being processed into Presto Logs
C) The $1,000 cost for cutting down the tree is relevant to the decision
D) The logs should be processed

Answer 1

Answer: below

Explanation:

- The sawdust should be sold as is without being processed into Presto

Logs.

- The pieces of unfinished lumber should be processed