Answer:
Incremental income from
alternative 1 = $ 41,200
alternative 2 = $ 23850
alternative 3 = $ 34,450
Explanation:
Data provided:
Number of denim Jackets manufactured = 5,150
Cost of each jacket = $ 41.0
Alternative 1:
Selling cost of the second hand clothes = $ 8
Therefore,
the incremental income generated from the alternative 1 = 5,150 × $ 8
= $ 41,200
Alternative 2:
Disassembling cost = $ 32,800
selling cost of each jacket = $ 11
therefore, the incremental income generated from the alternative 2 = Income from selling the jackets to recycler - Disassembling cost
or
the incremental income generated from the alternative 2
= ($ 11 × 5150) - $32,800
or
= $ 23850
Alternative 3:
Reworking cost = $ 102,800
selling cost of each jacket = $ 45
Number of jackets that can be sold = 3,050
therefore, the incremental income generated from the alternative 3 = Income from selling the jackets - reworking cost
or
the incremental income generated from the alternative 2
= ($ 45 × 3050) - $ 102,800
or
= $ 34,450
