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.

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Definitions:

Swap Contract

A derivative contract through which two parties exchange financial instruments, typically involving cash flows based on a specified notional amount.

Specified Intervals

Pre-determined or agreed periods at which certain events or measurements take place.