A Company Has the Choice of Either Selling 1,000 Defective

question 63

Multiple Choice

A company has the choice of either selling 1,000 defective units as scrap or rebuilding them. The company could sell the defective units as they are for $4.00 per unit. Alternatively, it could rebuild them with incremental costs of $1.00 per unit for materials, $2.00 per unit for labor, and $1.50 per unit for overhead, and then sell the rebuilt units for $8.00 each. What should the company do?

• A) Sell the units as scrap.
• B) Rebuild the units.
• C) It does not matter because both alternatives have the same result.
• D) Neither sell nor rebuild because both alternatives produce a loss. Instead, the company should store the units permanently.
• E) Throw the units away.

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Definitions:

Events

Occurrences or happenings, especially significant ones, that are planned or accidental.

Remember

The act or faculty of retaining and retrieving information or experiences from the past.

Children

Young human beings below the age of puberty or below the legal age of majority.

Remember Best

Refers to the ability or process of recalling information or experiences with the highest degree of accuracy or clarity.