Luxury Motors has 7,400 defective autos on hand, which cost $13,616,000 to manufacture, Luxury can either sell these defective autos as scrap for $8,400 per auto, or spend an additional $18,720,000 on repairs and then sell them for $12,400 per unit. What is the net advantage to repair the autos compared to selling them for scrap? Multiple Choice $62,160,000 $10,880,000 $91,760,000 $18,720,000 Luxury Motors has 7,400 defective autos on hand, which cost $13,616,000 to manufacture. Luxury can either sell these defective autos as scrap for $8.400 per auto, or spend an additional $18.720,000on repairs and then sell them for $12.400 per unit. What is the net advantage to repair the autos compared to selling them for scrap?Mutiple Choce$62360000$10.5880.000$91760,000$18.720.000

Answered: Luxury Motors has 7,400 defective autos…

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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Question

Luxury Motors has 7,400 defective autos on hand, which cost $13,616,000 to manufacture, Luxury can either sell these defective autos as scrap for $8,400 per auto, or spend an additional $18,720,000 on repairs and then sell them for $12,400 per unit. What is the net advantage to repair the autos compared to selling them for scrap? Multiple Choice $62,160,000 $10,880,000 $91,760,000 $18,720,000

Expert Solution

Step 1: Define net advantage:

Net advantage is the amount of difference between two different options of the entity. It helps to determine the better option amongst two different options.