Shaw is a lumber company that also manufactures custom cabinetry. It is made up of two divisions: Lumber and Cabinetry. The Lumber Division is responsible for harvesting and preparing lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The lumber produced by the Lumber Division has a variable cost of $2.20 per linear foot and full cost of $3.20. Comparable quality wood sells on the open market for $6.60 per linear foot. Required: 1. Assume you are the manager of the Cabinetry Division. Determine the maximum amount you would pay for lumber. 2. Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have excess capacity. Repeat assuming you have no excess capacity. 3. Assume you are the president of Shaw. Determine a mutually beneficial transfer price assuming there is excess capacity. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the Ilumber if you have excess capacity. Repeat assuming you have no excess capacity. (Enter your answers to 2 decimal places.) Minimum Price with Excess Capacity Minimum Price without Excess Capacity < Required 1 Required 3
Shaw is a lumber company that also manufactures custom cabinetry. It is made up of two divisions: Lumber and Cabinetry. The Lumber Division is responsible for harvesting and preparing lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The lumber produced by the Lumber Division has a variable cost of $2.20 per linear foot and full cost of $3.20. Comparable quality wood sells on the open market for $6.60 per linear foot. Required: 1. Assume you are the manager of the Cabinetry Division. Determine the maximum amount you would pay for lumber. 2. Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have excess capacity. Repeat assuming you have no excess capacity. 3. Assume you are the president of Shaw. Determine a mutually beneficial transfer price assuming there is excess capacity. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the Ilumber if you have excess capacity. Repeat assuming you have no excess capacity. (Enter your answers to 2 decimal places.) Minimum Price with Excess Capacity Minimum Price without Excess Capacity < Required 1 Required 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have excess capacity. Repeat assuming you have no excess capacity.
Transcribed Image Text:Shaw is a lumber company that also manufactures custom cabinetry. It is made up of two divisions: Lumber and Cabinetry. The Lumber
Division is responsible for harvesting and preparing lumber for use; the Cabinetry Division produces custom-ordered cabinetry. The
lumber produced by the Lumber Division has a variable cost of $2.20 per linear foot and full cost of $3.20. Comparable quality wood
sells on the open market for $6.60 per linear foot.
Required:
1. Assume you are the manager of the Cabinetry Division. Determine the maximum amount you would pay for lumber.
2. Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the lumber if you have
excess capacity. Repeat assuming you have no excess capacity.
3. Assume you are the president of Shaw. Determine a mutually beneficial transfer price assuming there is excess capacity.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Assume you are the manager of the Lumber Division. Determine the minimum amount you would charge for the Ilumber if you
have excess capacity. Repeat assuming you have no excess capacity. (Enter your answers to 2 decimal places.)
Minimum Price with Excess Capacity
Minimum Price without Excess Capacity
< Required 1
Required 3
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