Gordon Corporation inadvertently produced 10,000 defective digital watches. The watches cost $8 each to produce. A...

 

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Gordon Corporation inadvertently produced 10,000 defective digital watches. The watches cost $8 each to produce. A salvage company will purchase the defective units as they are for $3 each. Gordon's production manager reports that the defects can be corrected for $5 per unit, enabling them to be sold at their regular market price of $12.50. Gordon should: Sell the watches for $3 per unit. Correct the defects and sell the watches at the regular price. Sell the watches as they are because repairing them will cause their total cost to exceed their selling price. Sell 5,000 watches to the salvage company and repair the remainder. Throw the watches away Gordon Corporation inadvertently produced 10,000 defective digital watches. The watches cost $8 each to produce. A salvage company will purchase the defective units as they are for $3 each. Gordon's production manager reports that the defects can be corrected for $5 per unit, enabling them to be sold at their regular market price of $12.50. Gordon should: Sell the watches for $3 per unit. Correct the defects and sell the watches at the regular price. Sell the watches as they are because repairing them will cause their total cost to exceed their selling price. Sell 5,000 watches to the salvage company and repair the remainder. Throw the watches away

Answer rating: 100% (QA)

Solution Sale to Salvage Company 30000 100003 Sale after repair Addi... View the full answer