Chang Industries has 1,200 defective units of product that already cost $50 each to produce. A salvage company will purchase the defective units as is for $23 each. Chang's production manager reports that the defects can be corrected for $42 per unit, enabling them to be sold at their regular market price of $39. The $50 per unit is a:

Chang Industries has 1,200 defective units of product that already cost $50 each to produce. A salvage company will purchase the defective units as is for $23 each. Chang's production manager reports that the defects can be corrected for $42 per unit, enabling them to be sold at their regular market price of $39. The $50 per unit is a:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

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.
Road Master Shocks has 15,000 units of a defective product on hand that cost $80,000 to manufacture. The company can either sell this product as scrap for $6 per unit or it can sell the product for $9 per unit by reworking the units and correcting the defects at a cost of $40,000. Prepare a schedule to show the effect of selling the defective units as scrap or rework.
Road master shocks has 15000 units of a defective product on hand that costs $80,000 to manufacture. The company can either sell this product as is for scrap for $6 per unit or it can sell the product for $9 per unit after reworking the units to correct the defects at a cost of $50,000. What should the company do?
Finn Enterprises manufactures ceiling fans that normally sell for $92 each. There are 320 defective fans in inventory, which cost $60 each to manufacture. These defective units can be sold as is for $20 each, or they can be processed further for a cost of $42 each and then sold for the normal selling price. Stooge Enterprises would be better off by a OA $23,040 not increase in operating income if the ceiling fans are repaired. OB. $9.600 net increase in operating income if the ceiling fans are repaired OC. $23,040 net increase in operating income if the ceiling fans are sold as is OD. $9,600 net increase in operating income if the ceiling fans are sold as is.
A company must decide between scrapping or reworking units that do not pass inspection. The company has 22000 defective units that cost $6 per unit to manufacture. The units can be sold as is for $2.00 each or they can be reworked for $4.50 each and then sold for the full price of $8.50 each. If the units are sold as is the company will be able to build 22000 replacement units at a cost of $6 each and sell them at the full price of $8.50. (1) What is the incremental income from selling the units as scrap? (2) what is the incremental income from reworking and selling the units?(3) should the company sell the units as scrap or rework them?
Luca Inc. has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following manufacturing costs: Assume that Luca Inc. has sufficient capacity to fill the order without harming normal production and sales. If Luca Inc. accepts the order, what effect will the order have on the company's short-term profit? Per Unit Direct materials $30 Direct labor $20 Variable manufacturing overhead $15 Fixed manufacturing overhead $25 a. $50,000 decrease b. $30,000 increase c. $20,000 increase d. $30,000 decrease
Diskmar has received a special order for 2,000 units of its product at a special price of $75. The product normally sells for $100 and has the following manufacturing costs:Direct material costs are $30; Direct labor costs are $20; and Variable Overhead costs are $15. Assume that Diskmar has sufficient capacity to fill the order without harming normal production and sales. a. If Diskmar accepts the order, what effect will the order have on the company's short-term profit? b. What minimum price should Diskmar charge to achieve a $25,000 incremental profit? c. Now assume Diskmar is currently operating at full capacity and cannot fill the order without harming normal production and sales. If Diskmar accepts the order, what effect will the order have on the company's short-term profit?
A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $6.00 per unit to manufacture. The units can be a) sold as is for $3.00 each, or b) reworked for $4.50 each and then sold for the full price of $9.00 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.)
Hazel Company makes an unassembled product that it currently sells for $55. Production costs are $20. Hazel is considering assembling the product and selling it for $68. The cost to assemble the product is estimated at $12. What decision should Hazel make? A) Sell before assembly; net income per unit will be $12 greater. B) Sell before assembly; net income per unit will be $1 greater. C) Process further; net income per unit will be $13 greater. D) Process further; net income per unit will be $1 greater. 24 E) none of the above
Ross has received a special order for 10,000 units of its product at a special price of $15. The product normally sells for $22 and has the following manufacturing costs: Per unit Direct materials $ 6 Direct labor 4 Variable manufacturing overhead 3 Fixed manufacturing overhead 7 Unit cost $ 20 Assume that Ross has sufficient capacity to fill the order. If Ross accepts the order, what effect will the order have on the company’s short-term profit?
A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 10,000 defective units that cost $5.30 per unit to manufacture. The units can be a) sold as is for $3.10 each, or b) reworked for $4.60 each and then sold for the full price of $8.40 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.) Incremental income (loss) The company should: Sale as Scrap Rework
A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 10,000 defective units that cost $5.30 per unit to manufacture. The units can be a) sold as is for $3.10 each, or b) reworked for $4.60 each and then sold for the full price of $8.40 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.) Incremental income (loss) The company should: Sale as Scrap $