A company has an inventory of 1,000 assorted parts for a tool that has been discontinued. The inventory cost is $78,000. The parts can be either (a) remachined at total additional costs of $24,500 and then sold for $33,000 or (b) sold as scrap for $6,500. Based only on quantitative data, which action should be taken?
A company has an inventory of 1,000 assorted parts for a tool that has been discontinued. The inventory cost is $78,000. The parts can be either (a) remachined at total additional costs of $24,500 and then sold for $33,000 or (b) sold as scrap for $6,500. Based only on quantitative data, which action should be taken?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company has an inventory of 1,000 assorted parts for a tool that has been discontinued. The inventory cost is $78,000. The parts can be either (a) remachined at total additional costs of $24,500 and then
sold for $33,000 or (b) sold as scrap for $6,500. Based only on quantitative data, which action should be taken?
Remachine since the difference in favor of remachining is $2000
b.
Remachine since the difference in favor of remachining is $8500
c.
Sell as scrap since the difference in favor of selling is $6500
d.
Sell as scrap since the difference in favor of selling is $2000
Clear my choice
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