Vaughn, Inc. has 9700 obsolete calculators, which are carried in inventory at a cost of $19900. If the calculators are scrapped, they can be sold for $1.20 each (for parts). If they are repackaged, at a cost of $14300, they could be sold to toy stores for $2.50 per unit. What alternative should be chosen, and why? Repackage; revenue is $5600 greater than cost Scrap; operating income is $1690 greater Scrap; incremental loss is $8260 Repackage; receive operating income of $9950

Vaughn, Inc. has 9700 obsolete calculators, which are carried in inventory at a cost of $19900. If the calculators are scrapped, they can be sold for $1.20 each (for parts). If they are repackaged, at a cost of $14300, they could be sold to toy stores for $2.50 per unit. What alternative should be chosen, and why? Repackage; revenue is $5600 greater than cost Scrap; operating income is $1690 greater Scrap; incremental loss is $8260 Repackage; receive operating income of $9950

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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