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Jobisdone [24]
3 years ago
10

Marathon Company has 10,000 units of its product that were produced last year at a total cost of $150,000. The units were damage

d in a rain storm because the warehouse where they were stored developed a leak in the roof. Marathon can sell the units as is for $2 each or it can repair the units at a total cost of $18,000 and then sell them for $5 each. Should Marathon sell the units as is or repair them and then sell them
Business
1 answer:
V125BC [204]3 years ago
8 0

Answer: Marathon should repair the units since an income of $12000 will be gotten.

Explanation:

Based on the information given, the following can be deduced:

Revenue when repaired = 10000 × $5 = $50000

Revenue if sold without repair = 10000 × $2 = $20000

Incremental revenue = $50000 - $20000 = $30000

Cost to repair = $18000

Incremental be Income = $30000 - $18000 = $12000

Therefore, Marathon should repair the units since an income of $12000 will be gotten.

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