Hip Manufacturing produces denim clothing. This year it produced 3,000 denim jackets at a cost of $90,000. These jackets were damaged in the warehouse during storage Management identified three alternatives for these jackets. 1. Jackets can be sold as scrap to a secondhand clothing shop for $18,000 2. Jackets can be disassembled at a cost of $6,000 and sold to a recycler for $36,000. 3. Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be $102.000, and the jackets can then be sold for $135,000 Required: (1) Compute the income for each alternative. (2) Which alternative should be chosen? Scrap, Recycle or Rework Analysis Revenue from scraphecycle/rework Scrap Recycle Rework
Hip Manufacturing produces denim clothing. This year it produced 3,000 denim jackets at a cost of $90,000. These jackets were damaged in the warehouse during storage Management identified three alternatives for these jackets. 1. Jackets can be sold as scrap to a secondhand clothing shop for $18,000 2. Jackets can be disassembled at a cost of $6,000 and sold to a recycler for $36,000. 3. Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be $102.000, and the jackets can then be sold for $135,000 Required: (1) Compute the income for each alternative. (2) Which alternative should be chosen? Scrap, Recycle or Rework Analysis Revenue from scraphecycle/rework Scrap Recycle Rework
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Hip Manufacturing produces denim clothing. This year it produced 3,000 denim jackets at a cost of $90,000. These jackets were
damaged in the warehouse during storage Management identified three alternatives for these jackets.
1. Jackets can be sold as scrap to a secondhand clothing shop for $18,000
2. Jackets can be disassembled at a cost of $6,000 and sold to a recycler for $36,000.
3. Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be $102,000, and the jackets can then
be sold for $135,000
Required:
(1) Compute the income for each alternative.
(2) Which alternative should be chosen?
Scrap, Recycle or Rework Analysis
Revenue from scrap/recycle/rework
Cost of recycled/reworked units
Income
$
Scrap
0$
Recycle
✪
0 $
Rework
0
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