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