6. The Lantern Corporation has 1,000 obsolete lanterns that are carried in inventory at a manufacturing cost of P20,000. If the lanterns are re-machined for P5,000, they could be sold for P9,000. If the lanterns are scrapped, they could be sold for P1,000. What alternative is more desirable and what are the total relevant costs for the alternative? a. Re-machine and P5,000. b. Re-machine and P25,000. c. Scrap and P20,000. d. Neither, as there is an overall loss under either alternatives.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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6. The Lanterm Corporation has 1,000 obsolete lanterns that are carried in inventory at a manufacturing
cost of P20,000. If the lanterns are re-machined for P5,000, they could be sold for P9,000. Ifthe lanterns
are scrapped, they could be sold for P1,000. What alternative is more desirable and what are the total
relevant costs for the alternative?
a. Re-machine and P5,000.
b. Re-machine and P25,000.
c. Scrap and P20,000.
d. Neither, as there is an overall loss under either alternatives.
< O O
Transcribed Image Text:6. The Lanterm Corporation has 1,000 obsolete lanterns that are carried in inventory at a manufacturing cost of P20,000. If the lanterns are re-machined for P5,000, they could be sold for P9,000. Ifthe lanterns are scrapped, they could be sold for P1,000. What alternative is more desirable and what are the total relevant costs for the alternative? a. Re-machine and P5,000. b. Re-machine and P25,000. c. Scrap and P20,000. d. Neither, as there is an overall loss under either alternatives. < O O
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