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Setler79 [48]
3 years ago
14

Signal mistakenly produced 1,075 defective cell phones. The phones cost $66 each to produce. A salvage company will buy the defe

ctive phones as they are for $38 each. It would cost Signal $86 per phone to rework the phones. If the phones are reworked, Signal could sell them for $136 each. Signal has excess capacity. Should Signal scrap or rework the phones.
Required:
Compute the incremental net income from reworking the phones.
Business
1 answer:
zimovet [89]3 years ago
7 0

Answer:

If the phones are reworked, income will increase by $12,900.

Explanation:

<u>Because we need to determine the incremental income, we will not take into account the original costs. They remain constant in both options.</u>

Sell as-is:

Effect on income= 1,075*38

Effect on income= $40,850 increase

Rework:

Effect on income= 1,075*(136 - 86)

Effect on income= $53,750

If the phones are reworked, income will increase by $12,900.

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Answer:

B.enables production to be ahead of demand.

Explanation:

<em>One of the benefits of a wholesale warehouse in the chain of distribution is that it </em><em>enables production to be ahead of demand</em><em>.</em>

A warehouse generally represents a large house where goods/products are kept prior to their distribution for sale.

The use of a warehouse offers several advantages to producers. These include:

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3 years ago
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<span>higher the risk for an investment</span>
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