Answer:
It is more profitable to upgrade the calculators.
Explanation:
Giving the following information:
The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calculators are upgraded at a total cost of $140,000, they can be sold for a total of $200,000. As an alternative, the calculators can be sold in their present condition for $50,000.
We need to determine whether it is more convenient to upgrade the calculators or sell them as they are.
Upgrade:
Effect on income= 200,000 - 720,000 - 140,000= -$660,000
Not upgrade:
Effect on income= 50,000 - 720,000= -$670,000
It is more profitable to upgrade the calculators.
