# Walloon Company produced 150 defective units last month at a unit manufacturing cost of $30. The defective units were discovered before leaving the plant. Walloon can sell them “as is” for$20 or can rework them at a cost of $15 and sell them at the regular price of$50. What is the total relevant cost of reworking the defective units? a. $2,250 b.$3,000 c. $4,500 d.$6,750

### Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

Chapter
Section

### Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 17, Problem 19E
Textbook Problem
21 views

## Walloon Company produced 150 defective units last month at a unit manufacturing cost of $30. The defective units were discovered before leaving the plant. Walloon can sell them “as is” for$20 or can rework them at a cost of $15 and sell them at the regular price of$50. What is the total relevant cost of reworking the defective units? a. $2,250 b.$3,000 c. $4,500 d.$6,750

To determine

Ascertain the total relevant cost of reworking the defective units.

### Explanation of Solution

Tactical decision making: Tactical decision making is a process in which the company can choose the correct alternative based on the profitability. In tactical decision making, offer price of a product is compared with the normal selling price and offer price less than the normal selling price of product is considered as the idle capacity for decision making.

In this case, the manufacturing costs for defective units of $30 is a irrelevant cost for the selling or rework decision, because the manufacturing cost of defective units is a past cost and it does not create any impact on the future decision. Hence, company should consider the rework cost of$15 per unit as a relevant cost...

### Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

#### The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Find more solutions based on key concepts
Should an economic model describe reality exactly?

Essentials of Economics (MindTap Course List)

What is Form 944?

PAYROLL ACCT.,2019 ED.(LL)-TEXT

What is a VAN?

Accounting Information Systems

NONCONSTANT GROWTH VALUATION Hart Enterprises recently paid a dividend, D0, of 1.25. It expects to have noncons...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)