Question

A company has inventory that cost $50,000. Its scrap value is $65,000. The inventory could be sold for $150,000 if manufactured further at an additional cost of $80,000. What should this company do?

Answer 1

Answer:

It is more profitable to continue processing.

Explanation:

Giving the following information:

A company has inventory that cost $50,000. Its scrap value is $65,000. The inventory could be sold for $150,000 if manufactured further at an additional cost of $80,000.

Sell for scrap= 65,000 - 50,000= 15,000

Continue processing= 150,000 - 80,000 - 50,000= 20,000