Question: Power Comp has decided to discontinue its Model 250 computer. It currently has 5,000 partially completed units on hand. To date, the company has spent

Power Comp has decided to discontinue its Model 250 computer.

It currently has 5,000 partially completed units on hand. To date, the company has spent $ 900 per unit, or $ 4,500,000 to bring these computers to their current stage of completion. The company estimates that an additional $ 400 per unit will be incurred to complete production.

The prices have fallen since the company has announced the product will be discontinued. If the units are completed, they can be sold for only $ 1 000. Should the company complete production or sell them to an assembly company as they are for $ 500 per unit?

Show calculation for continuing production and for selling as is and your advice to management

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