Answer the following questions. 1. A company has an inventory of 1,300 assorted parts for a line
Question:
Answer the following questions.
1. A company has an inventory of 1,300 assorted parts for a line of missiles that has been discontinued.
The inventory cost is $71,000. The parts can be either
(a) Remachined at total additional costs of $27,500 and then sold for $31,500 or
(b) Sold as scrap for $6,000. Which action is more profitable? Show your calculations.
2. A truck, costing $102,500 and uninsured, is wrecked its first day in use. It can be either
(a) Disposed of for $14,000 cash and replaced with a similar truck costing $105,500 or
(b) Rebuilt for $86,000 and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations.
Step by Step Answer:
Horngrens Cost Accounting A Managerial Emphasis
ISBN: 978-0134475585
16th edition
Authors: Srikant M. Datar, Madhav V. Rajan