Answered: Micron Manufacturing produces…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 2MC: Denali Company manufactures household products such as windows, light fixtures, ladders, and work...

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Micron Manufacturing produces electronic equipment. This year, it produced 7,500 oscilloscopes at a
manufacturing cost of $300 each. These oscilloscopes were damaged in the warehouse during storage and,
while usable, cannot be sold at their regular selling price of $500 each. Management has investigated the
matter and has identified three alternatives for these oscilloscopes.
1. They can be sold as is to a wholesaler for $75 each.
2. They can be disassembled at a cost of $400,000 and the parts sold to a recycler for $130 each.
3. They can be reworked and turned into good units. The cost of reworking the units will be $3,200,000,
after which the units can be sold at their regular price of $500 each.
Required
Which alternative should management pursue? Show analysis for each alternative.

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