United Lumber will use trees from its forests for two products. The

United Lumber will use trees from its forests for two products. The tree trunks will be used for lumber and the branches converted into wood chips to make fiberboard. The cost of this conversion would be the same whether done at the logging site, where the trees are debranched, or at United's factory. However, wood chips occupy less than half the volume of the branches from which they are made. The information given, if accurate, most strongly supports which of the following?

A. Converting the branches into wood chips at the logging site would require transporting a fully assembled woodchipping machine to and from the site.

B. It would be more economical to debranch the trees at the factory where the fiberboard is manufactured.

C. The debranching of trees and the conversion of the branches into chips are the only stages in the processing of branches that it would be in United's economic advantage to perform at the logging site.

D. Transportation costs from the logging site to the factory that are determined by volume of cargo would be lower if the conversion into chips is done at the logging site rather than at the factory.

E. In the wood-processing industry, branches are used only for the production of wood chips for fiberboard.


D. The key here is the last sentence. If only half of the volume of the branches can be turned into wood chips, that's a lot of extra material to deal with.

D says that volume-based cargo costs would be lower if you process the branches at the site. If you process on-site, you're only sending the material to be used, which saves you half of the volume. If you send entire branches, you're paying to ship the excess material that isn't used for wood chips.

A--We have no information about the machinery requirements for wood chip conversion.
B--We have no information about the cost of debranching at the factory or at the site.
C--We don't know if there are other stages that could be economically advantageous.
E--We can't extrapolate from United Lumber to the entire wood-processing industry; we can't draw a universal conclusion from particular premises.