U-Junk Auto is a car lot that has just received a 1991 Toyota Tercel that is...

 

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U-Junk Auto is a car lot that has just received a 1991 Toyota Tercel that is barely in running condition. The company paid S400 for the car has already received an offer to be sold (as is) for $600. The shop's mechanic does not wish to sell the car as is, he believes that the company should replace the damaged parts at a cost of $200 and have him repair the car. It would take him 30 hours of work at $20 per hour. The company applies variable overhead costs to jobs at a rate of $10 per direct labour hour. If the upgrades are made, the car could be sold for $1,500. Required Determine the net dollar advantage or disadvantage of selling the car now instead of repairing it. U-Junk Auto is a car lot that has just received a 1991 Toyota Tercel that is barely in running condition. The company paid S400 for the car has already received an offer to be sold (as is) for $600. The shop's mechanic does not wish to sell the car as is, he believes that the company should replace the damaged parts at a cost of $200 and have him repair the car. It would take him 30 hours of work at $20 per hour. The company applies variable overhead costs to jobs at a rate of $10 per direct labour hour. If the upgrades are made, the car could be sold for $1,500. Required Determine the net dollar advantage or disadvantage of selling the car now instead of repairing it.

Answer rating: 100% (QA)

Option1 Sale price of car 600 Less purchase price of car 400 Profit 200 O... View the full answer