The Criders Company Has 12,000 Units of Obsolete Inventory

question 53

Multiple Choice

The Criders Company has 12,000 units of obsolete inventory.The units originally cost $6,000.The company can either sell them for scrap at $.20 per unit or they can invest $2,000 to be able to sell them at a price of $.60 per unit.With regard to this decision, relevant costs or benefits include:

• A)$6,000 only.
• B)$2,000 and $.20 per unit only.
• C)$.20 per unit, $.60 per unit, and $2,000.
• D)$2,000 and $6,000 only.

---

Definitions:

AVC

Average Variable Cost, which is the variable cost per unit of output, calculated by dividing total variable costs by the quantity of output.

ATC

Average Total Costs, which is the sum of all production costs (fixed and variable) divided by the quantity of output produced, detailing the average cost per unit of output.

Economic Conditions

The state of an economy at a given time, encompassing factors such as inflation, unemployment rates, and GDP growth.

Decreasing-Cost Industry

An industry where average costs of production decrease as the industry grows and output increases, due to factors like technology improvements or economies of scale.