Jasper Joints Has 1,000 Obsolete Joints on Hand

question 57

Multiple Choice

Jasper Joints has 1,000 obsolete joints on hand. These units were produced a year ago at a cost of $10,000. The units could be scrapped for $1,000 or reworked for $2,000 and sold for $5,000. Which alternative is desirable and why?

• A) Scrap, profit of $1,000 is higher than the other option
• B) Rework, incremental loss $7,000
• C) Rework, profit of $3,000 is higher than the other option
• D) Scrap, incremental loss $9,000

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