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abruzzese [7]
3 years ago
15

The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calc

ulators are upgraded at a total cost of $130,000, they can be sold for a total of $190,000. As an alternative, the calculators can be sold in their present condition for $50,000.What is the financial advantage (disadvantage) to the company from upgrading the calculators?
Business
1 answer:
Arisa [49]3 years ago
7 0

Answer:

Financial advantage = $10,000

Explanation:

Since the calculators are obsolete, in the current state they only have value of $50,000

If further processed,

Sales = 190,000

Processing cost = 130,000

Total profit after processing = 190,000 - 130,000 = $60,000

The financial advantage of processing further = 60,000 - 50,000

Financial advantage = $10,000, the calculators should be processed further.

Hope that helps.

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