Chang Industries has 1,200 defective units of product that already cost $50 each to produce. A salvage company will purchase the defective units as is for $23 each. Chang's production manager reports that the defects can be corrected for $42 per unit, enabling them to be sold at their regular market price of $39. The $50 per unit is a:
Chang Industries has 1,200 defective units of product that already cost $50 each to produce. A salvage company will purchase the defective units as is for $23 each. Chang's production manager reports that the defects can be corrected for $42 per unit, enabling them to be sold at their regular market price of $39. The $50 per unit is a:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject:- Accounting
Transcribed Image Text:Chang Industries has 1,200 defective units of product that already cost $50 each to produce. A salvage company
will purchase the defective units as is for $23 each. Chang's production manager reports that the defects can be
corrected for $42 per unit, enabling them to be sold at their regular market price of $39. The $50 per unit is a:
Multiple Choice
Transcribed Image Text:5
38
Opportunity cost.
Sunk cost.
Out-of-pocket cost.
Period cost.
Incremental cost.
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