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anyanavicka [17]
3 years ago
10

A company incurred $1,000 in costs to produce 500 units which sell for $1,500. Upon inspection, it was determined the units were

defective and reworking the units would cost an additional $1.50 per unit. The defective units can be sold as is for $1.00 each. How should the company handle the defective units?
Business
2 answers:
sveticcg [70]3 years ago
8 0

Answer:

Rework the units which will generate incremental income of $750.

Explanation:

tester [92]3 years ago
5 0

Answer:

rework the units by spending $750 extra in order to get $1,500 in revenue

Explanation:

The company incurred in the following sunk costs:

  • production costs = $2 per unit

Since the 500 units were all defective the company can:

sell the defective units at $1 each = $1 x 500 = $500 revenue

reworking the units for $1.50 each and selling them for $3 ⇒ contribution margin = $3 - $1.50 = $1.50 per unit, which results in a $750 gross profit

The company must consider the $1,000 spent first as sunk costs, since whatever action they decide, they will not recover them. Therefore the company must only analyze the alternatives starting from scratch.  

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4 0
3 years ago
When______________are constrained with government controls, they do not achieve their potential.
const2013 [10]

Answer:

The answer is Businesses.

Explanation:

When the businesses are burdened with laws, regulations and taxes, their potential to expand and develop in the long run decreases. Because of this, it is believed, that lesser the economic regulation of the businesses, the better they will function.

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3 years ago
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Answer: Risk assessment

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To have a thought about what aspect of a business, might cause harm and decide whether you are taking reasonable steps to prevent that harm is known as a risk assessment.

7 0
3 years ago
Myrna borrows $500 at an annually compounded interest rate of 8 percent that she will repay at the end of 10 years. how much wil
Burka [1]

Myrna borrows $500 at an annually compounded interest rate of 8 percent that she will repay at the end of 10 years. She will be required to pay off $1,079.46 at the end of 10 years.

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4 0
1 year ago
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7 0
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