J A company must decide between scrapping or reworking units that do not pass inspection. The company has 19,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $57,000 or reworked for $87,400 and then sold for $165,300. (a) Prepare a scrap or rework analysis of income effects. (b) Should the company sell the units as scrap or rework them? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should: Scrap Rework

J A company must decide between scrapping or reworking units that do not pass inspection. The company has 19,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $57,000 or reworked for $87,400 and then sold for $165,300. (a) Prepare a scrap or rework analysis of income effects. (b) Should the company sell the units as scrap or rework them? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should: Scrap Rework

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A
IT Company has 15,000 units in inventory that had a production cost of P3 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of P23,000 and sold for P28,000. Another alternative is to sell the units to a junk dealer for P8,500. The relevant cost for IT Company to consider in making its decision is A.P45,000 of original product costs B.P23,000 for reworking the units C.P68,000 for reworking the units D.P28,000 for selling the units to the junk dealer
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Bramble Corp. spent $11600 to produce Product 89, which can be sold as is for $15000, or processed further incurring additional costs of $4200 and then be sold for $20000. Which amounts are relevant to the decision about Product 89? $11600, $15000, and $20000 $15000, $4200, and $20000 $11600, $15000, $4200 and $20000 $11600, $4200, and $20000
Required:1. Is Davis’s general approach to calculating the opportunity cost in terms of the physical units involved, correct? Explain.2. Assuming productive capacity cannot be increased for either machine in December, how many PVRs would WCD have to forgo selling to existing customers to fill the special order from Scottie Barnes Limited ?3. Calculate the opportunity cost of accepting the special order.4. Calculate the net effect on profits of accepting the special order.5. Now assume that WCD is operating at 75% of capacity in December. What is the minimum price WCD should be willing to accept on the special order?
Legendary Motors has 7,000 defective autos on hand, which cost $12, 880,000 to manufacture. Legendary can either sell these defective autos as scrap for $8,000 per auto, or spend an additional $18, 320, 000 on repairs and then sell them for $12,000 per unit. What is the net advantage to repair the autos compared to selling them for scrap? Group of answer choices $84,000,000 $18, 320, 000 $9, 680,000 $56,000,000
Answer the following questions. 1. 2. A company has an inventory of 1,050 assorted parts for a line of missiles that has been discontinued. The inventory cost is $73,000. The parts can be either (a) remachined at total additional costs of $25,500 and then sold for $32,500 or (b) sold as scrap for $2,500. Which action is more profitable? Show your calculations. A truck, costing $104,500 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $16,000 cash and replaced with a similar truck costing $106,000 or (b) rebuilt for $82,000, and thus be brand-new as far as operating characteristics and looks are concemed. Which action is less costly? Show your calculations 1. A company has an inventory of 1,050 assorted parts for a line of missiles that has been discontinued. The inventory cost is $73,000. The parts can be either (a) remachined at total additional costs of $25,500 and then sold for $32,500 or (b) sold as scrap for $2,500. Which action is more…
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