SRC Refrigeration Company manufactures and sells refrigerator display units for flowers. A salesperson for the company is callin
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Answer:
Remote enter keys shall be further processed in order to decrease the amount of loss by $11,000.
Explanation:
As in the given case,
Number of units = 500
Carrying cost = $80,500
Cost per unit = 80,500/500 = $161
In case of scrap for the price of $4,000
Scrap price per unit = $4,000/500 = $8
Thus, loss per unit in case of scrap = $161 - $8 = $153
In case inventory is further processed
Total cost = $80,500 + $19,000 = $99,500
Cost per unit = $99,500/500 = $199
Revenue earned = $34,000
Revenue per unit = $34,000/500 = $68
Thus, loss per unit in case of further processing = $199 - $68 = $131
Therefore the inventory shall be processed in order to save the total loss of $153 - $131 = $22 per unit
Total loss saved = $22 500 = $11,000