What are the details of Forda Lumber Company's timber tract purchase and logging activities?
Forda Lumber Company owns a 7,000-acre tract of timber purchased in 2007 at a cost of $1,300 per acre. The land was estimated to have a value of $300 per acre without the timber at the time of purchase. In 2014, the timber tract was cruised and it was estimated that each acre contained 8,000 board feet of timber. Forda also built 10 miles of roads at a cost of $7,840 per mile to access the timber for logging. Following the completion of the roads, Forda logged and sold 3,500 trees containing a total of 850,000 board feet of timber.
Land Purchase Details
Forda Lumber Company's 7,000-acre tract of timber was acquired in 2007 at a cost of $1,300 per acre. The estimated value of the land without timber was $300 per acre. This means that the cost of purchasing the entire tract of land was $9.1 million, excluding the value of the timber. The decision to invest in the land was based on the potential timber resources it offered.
Timber Cruising and Evaluation
In 2014, Forda had the timber cruised to assess the volume of timber in the tract. The appraiser determined that each acre contained 8,000 board feet of timber. This information is crucial for planning the logging operations and estimating the potential revenue from timber sales.
Road Construction for Logging
After the timber was cruised, Forda invested in building 10 miles of roads at a cost of $7,840 per mile. These roads were essential for accessing the timber stand and transporting the harvested logs. Proper infrastructure such as roads is crucial for efficient logging operations and maximizing the timber yield.
Logging and Timber Sales
Once the roads were completed, Forda proceeded with logging operations and harvested 3,500 trees from the tract. These trees contained a total of 850,000 board feet of timber, with an average of 242 board feet per tree. The timber harvested from the tract was then sold, generating revenue for Forda Lumber Company.
Overall, the strategic acquisition of the timber tract, coupled with efficient logging practices and infrastructure investment, allowed Forda Lumber Company to capitalize on the valuable timber resources and generate income from timber sales.