Zanatech's Market for Its Remote Control Has Changed Significantly, and Zanatech

question 28

Multiple Choice

Zanatech's market for its remote control has changed significantly, and Zanatech has had to drop the selling price per unit from $45 to $38.There are some units in the work in process inventory that have costs of $30 per unit associated with them.Zanatech can sell these units in their current state for $22 each.It will cost Zanatech $11 per unit to rework these units so that they can be sold for $38 each.A new employee looks at the analysis and exclaims, "We'll lose money with either of these alternatives! Let's just throw these units in the trash!" What effect will this option have on net income?

• A)Profit will decrease by $45 per unit for each unit discarded.
• B)Profit will decrease by $30 per unit for each unit discarded.
• C)Profit will increase by $11 per unit since the completion costs will not have to be incurred.
• D)Profit will decrease by $5 per unit for each unit discarded.

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Definitions:

Laggard

An individual or entity that is slow to adopt new technologies, ideas, or practices, often trailing behind the majority in terms of innovation adoption.

Rotary-dial Telephone

An early type of telephone using a rotating dial to input numbers, prevalent before the introduction of touch-tone dialing.

Late Majority

A group of consumers who adopt a new product or technology after the average member of society, showing skepticism towards new innovations.

Microwave

An electric appliance that uses microwave radiation to heat or cook food rapidly, common in kitchens for its convenience.