Answer the following questions.
1. A company has an inventory of 1,000 assorted parts for a line of missiles that has been discontinued. The inventory cost is $88,000. The parts can be either
(a) Remachined at total additional costs of $33,000 and then sold for $38,500
(b) Sold as scrap for $2,200. Which action is more profitable? Show your calculations.
2. A truck, costing $110,000 and uninsured, is wrecked on its first day in use. It can be either
(a) Disposed of for $11,000 cash and replaced with a similar truck costing $112,200
(b) Rebuilt for $93,500, and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations.