1. A company has an inventory of 1,250 assorted parts for a line of missiles that has been discontinued. The inventory cost is $ 76,000. The parts can be either (a) remachined at total additional costs of $ 26,500 and then sold for $ 33,500 or (b) sold as scrap for $ 2,500. Which action is more profitable? Show your calculations.
2. A truck, costing $ 100,500 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $ 18,000 cash and replaced with a similar truck costing $ 103,000 or (b) rebuilt for $ 88,500 and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations.

  • CreatedMay 14, 2014
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