Answer the following questions. 1. A company has an inventory of 1,150 assorted parts for a line of missiles that has been discontinued. The inventory cost is $79,000. The parts can be either (a) remachined at total additional costs of $25,000 and then sold for $34,000 or (b) sold as scrap for $6,000. Which action is more profitable? Show your calculations. 2. A truck, costing $100,000 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $18,000 cash and replaced with a similar truck costing $102,000 or (b) rebuilt for $85,500, and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations. 1. A company has an inventory of 1,150 assorted parts for a line of missiles that has been discontinued. The inventory cost is $79,000. The parts can be either (a) remachined at total additional costs of $25,000 and then sold for $34,000 or (b) sold as scrap for $6,000. Which action is more profitable? Show your calculations. (Only complete the necessary answer boxes.) (b) (a) Remachine Scrap Deduct: Operating income
Answer the following questions. 1. A company has an inventory of 1,150 assorted parts for a line of missiles that has been discontinued. The inventory cost is $79,000. The parts can be either (a) remachined at total additional costs of $25,000 and then sold for $34,000 or (b) sold as scrap for $6,000. Which action is more profitable? Show your calculations. 2. A truck, costing $100,000 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $18,000 cash and replaced with a similar truck costing $102,000 or (b) rebuilt for $85,500, and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations. 1. A company has an inventory of 1,150 assorted parts for a line of missiles that has been discontinued. The inventory cost is $79,000. The parts can be either (a) remachined at total additional costs of $25,000 and then sold for $34,000 or (b) sold as scrap for $6,000. Which action is more profitable? Show your calculations. (Only complete the necessary answer boxes.) (b) (a) Remachine Scrap Deduct: Operating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Answer the following questions.
1.
A company has an inventory of 1,150 assorted parts for a line of missiles that has been discontinued. The inventory
cost is $79,000. The parts can be either (a) remachined at total additional costs of $25,000 and then sold for
$34,000 or (b) sold as scrap for $6,000. Which action is more profitable? Show your calculations.
2.
A truck, costing $100,000 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $18,000
cash and replaced with a similar truck costing $102,000 or (b) rebuilt for $85,500, and thus be brand-new as far as
operating characteristics and looks are concerned. Which action is less costly? Show your calculations.
1. A company has an inventory of 1,150 assorted parts for a line of missiles that has been discontinued. The inventory cost
is $79,000. The parts can be either (a) remachined at total additional costs of $25,000 and then sold for $34,000 or (b) sold
as scrap for $6,000. Which action is more profitable? Show your calculations. (Only complete the necessary answer
boxes.)
(b)
(a)
Remachine
Scrap
Deduct:
Operating income
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