Problem 10-4A Sell or process LO P1, A1 Harold Manufacturing produces denim clothing. This year, it...

 

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Problem 10-4A Sell or process LO P1, A1 Harold Manufacturing produces denim clothing. This year, it produced 5,190 denim jackets at a manufacturing cost of $42.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. 1. Jackets can be sold to a second-hand clothing shop for $8.00 each. 2. Jackets can be disassembled at a cost of $31,100 and sold to a recycler for $11.00 each. 3. Jackets can be reworked and turned into good jackets. However, with the damage, management estimates it will be able to assemble the good parts of the 5,190 jackets into only 2,970 jackets. The remaining pieces of fabric will be discarded. The cost of reworking the jackets will be $101,300, but the jackets can then be sold for their regular price of $45.00 each. Required: 1. Calculate the incremental income. Incremental revenue Incremental costs Incremental income The company should choose: $ Alternative 1 Sell to a second- hand shop 41,520 $ 41,520 $ Alternative 2 Disassemble and sell to a recycler Alternative 3 Rework and sell at regular prices 133,650 57,090 $ 57,090 $ 133,650 Problem 10-4A Sell or process LO P1, A1 Harold Manufacturing produces denim clothing. This year, it produced 5,190 denim jackets at a manufacturing cost of $42.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. 1. Jackets can be sold to a second-hand clothing shop for $8.00 each. 2. Jackets can be disassembled at a cost of $31,100 and sold to a recycler for $11.00 each. 3. Jackets can be reworked and turned into good jackets. However, with the damage, management estimates it will be able to assemble the good parts of the 5,190 jackets into only 2,970 jackets. The remaining pieces of fabric will be discarded. The cost of reworking the jackets will be $101,300, but the jackets can then be sold for their regular price of $45.00 each. Required: 1. Calculate the incremental income. Incremental revenue Incremental costs Incremental income The company should choose: $ Alternative 1 Sell to a second- hand shop 41,520 $ 41,520 $ Alternative 2 Disassemble and sell to a recycler Alternative 3 Rework and sell at regular prices 133,650 57,090 $ 57,090 $ 133,650

Answer rating: 100% (QA)

Answer Alternative 1 Jackets can be sold to a second hand clothing shop at the price of 8 each ... View the full answer