An Employee of Morgan Corporation Found Some Partially Completed Units

question 65

Essay

An employee of Morgan Corporation found some partially completed units of Model X in a dusty corner of the warehouse. A job ticket attached to the units indicates that a total of $750 in manufacturing costs have been used to bring the materials to this point in the manufacturing process. The units can be sold in their current condition for $275 to a scrap metal dealer. If Morgan spends $250 to complete the units, they could be sold for $600.
a. What should Morgan do? Why?
b. Identify the sunk cost, if any.

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