Marlboro Company recently discontinued the manufacture of product J15. The standard costs for this product were:...
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Marlboro Company recently discontinued the manufacture of product J15. The standard costs for this product were: Direct material Direct labor Variable overhead Fixed overhead Total $ 50 20 14 35 $119 There are 800 units of this product in the finished-goods inventory. The units are technologically obsolete, and the following alternatives are being considered: 1. Dispose of as scrap. The proceeds from the sale will equal the cost of transportation to the disposal site. 2. Sell to an exporter for sale in a developing country. The sales price to the exporter would be $12 per unit. 3. Remanufacture the products to convert them into model J16, a model that normally sells for $200. The additional cost to convert the J15 units would be $45; the standard cost to manufacture J16 is $125. Presently, there is sufficient capacity to manufacture product 316 directly or to do the conversion necessary work on J15. Requirements: a. Determine the current carrying value of the J15 inventory. b. Evaluate each alternative and determine the financial benefit to Marlboro if the alternative is pursued. Marlboro Company recently discontinued the manufacture of product J15. The standard costs for this product were: Direct material Direct labor Variable overhead Fixed overhead Total $ 50 20 14 35 $119 There are 800 units of this product in the finished-goods inventory. The units are technologically obsolete, and the following alternatives are being considered: 1. Dispose of as scrap. The proceeds from the sale will equal the cost of transportation to the disposal site. 2. Sell to an exporter for sale in a developing country. The sales price to the exporter would be $12 per unit. 3. Remanufacture the products to convert them into model J16, a model that normally sells for $200. The additional cost to convert the J15 units would be $45; the standard cost to manufacture J16 is $125. Presently, there is sufficient capacity to manufacture product 316 directly or to do the conversion necessary work on J15. Requirements: a. Determine the current carrying value of the J15 inventory. b. Evaluate each alternative and determine the financial benefit to Marlboro if the alternative is pursued.
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a Carrying value of J15 inventory 800 units x 119 standard cost per unit 95200 ... View the full answer
Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
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