Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A salvage company will purchase the defective units as is for $12 each. Thornton's production manager reports that the defects can be corrected for $20 per unit, enabling them to be sold at their regular market price of $28. The $28 per unit is a: Multiple Choice Sunk cost. Opportunity cost. Out-of-pocket cost. Period cost. Incremental cot.
Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A salvage company will purchase the defective units as is for $12 each. Thornton's production manager reports that the defects can be corrected for $20 per unit, enabling them to be sold at their regular market price of $28. The $28 per unit is a: Multiple Choice Sunk cost. Opportunity cost. Out-of-pocket cost. Period cost. Incremental cot.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A salvage company will purchase the defective units as
is for $12 each. Thornton's production manager reports that the defects can be corrected for $20 per unit, enabling them to be sold at their regular
market price of $28. The $28 per unit is a:
Multiple Choice
Sunk cost.
Opportunity cost.
Out-of-pocket cost.
Period cost.
Incremental cost.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F64a79b3f-fd5f-4a2a-adc4-365dc4b17ee7%2F87c43ae6-9c67-4a8b-acda-a5c7ba3e8a15%2F8feb2gm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A salvage company will purchase the defective units as
is for $12 each. Thornton's production manager reports that the defects can be corrected for $20 per unit, enabling them to be sold at their regular
market price of $28. The $28 per unit is a:
Multiple Choice
Sunk cost.
Opportunity cost.
Out-of-pocket cost.
Period cost.
Incremental cost.
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