Truck Components has an inventory of 525 obsolete remote entry keys that are carried in inventory at a manufacturing cost of $84,000. Production supervisor Sandy Johns must decide to do one of the following: • Process the inventory further at a cost of $21,000, with the expectation of selling it for $32,000 Scrap the inventory for a sales price of $6,000 What should Johns do? Present figures to support your decision. Prepare the Sell or Process Further analysis. (Enter a "0" for any zero amounts. Use a minus sign or parentheses when the scrap amount exceeds the process further amount.) Incremental Analysis Sell As Is (Scrap) Process Further Sell of Process Further Decision Revenues Less: Extra cost of processing further Net benefit (loss) to operating income Difference

Truck Components has an inventory of 525 obsolete remote entry keys that are carried in inventory at a manufacturing cost of $84,000. Production supervisor Sandy Johns must decide to do one of the following: • Process the inventory further at a cost of $21,000, with the expectation of selling it for $32,000 Scrap the inventory for a sales price of $6,000 What should Johns do? Present figures to support your decision. Prepare the Sell or Process Further analysis. (Enter a "0" for any zero amounts. Use a minus sign or parentheses when the scrap amount exceeds the process further amount.) Incremental Analysis Sell As Is (Scrap) Process Further Sell of Process Further Decision Revenues Less: Extra cost of processing further Net benefit (loss) to operating income Difference

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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