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elena55 [62]
3 years ago
14

Chang Industries has 2,000 defective units of product that have already cost $14 each to produce. A salvage company will purchas

e the defective units as they are for $5 each. Chang's production manager reports that the defects can be corrected for $6 per unit, enabling them to be sold at their regular market price of $21. The incremental income or loss on reworking the units is:
Business
1 answer:
sleet_krkn [62]3 years ago
4 0

Answer:

$20,000 income

Explanation:

<em>Computation</em>

Particulars                                                                 Amount

Sale Value of corrected product=                         $42,000.00

(2,000 * 21)

Less : Costs of Correction =                                   ($12,000.00)

(2000 * 6)

Less : Opportunity costs - Salvage Value Lost =  <u>($10,000.00)</u>

(2,000 * 5)

Incremental Revenue=                                             <u>$20,000.00</u>

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