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Put simply, the board foot calculation is how lumber yards stay in business. And it is the custom as well as legal.

Width is usually the next higher inch and boards are measured individually. Two boards 5-1/2" wide are considered 6 inches each thus a foot is used to calculate.

Length is usually to the next foot. Anything more than 3 inches over the foot, is the next foot.

The thickness is 1 for everything one inch or less. Thickness is usually 4/4, 6/4, 8/4 and 12/4. ( 1, 1-1/2, 2 and 3) The next higher x/4 is almost always used. Thus 5/4 is charged as 6/4. The other thing to remember is that if 4/4 is $1 a board foot, then 6/4 is probably $2, 8/4 is $3.50 and 12/4 is probably $5, ALL PER BOARD FOOT. In other words, the thicker the board, the higher price per board foot.
There is no way I would ever do business with anyone that "rounded" anywhere near that much. Rounding to the nearest inch is one thing, but rounding 3 inches into 1 foot is unreasonable to the point of being robbery.

The place I buy wood from the most calculates based upon inches, rounds down as often as rounds up, and lets me cherry pick my boards. The do charge premium for "wide" boards (depends upon species but typically anything wider than 8 or 10 inches) and price often more than doubles when going from 4/4 to 8/4. I pay for "kiln dried" wood, so I don't know if they mark it up or not, but I suspect they do. They have to stay in business, after all.

To the OP find another place to buy your wood. Don't expect any place to give you a discount for "defects", though. I just don't see it happening.
 
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