A Company Must Decide Between Scrapping or Rebuilding Units That

question 17

Essay

A company must decide between scrapping or rebuilding units that do not pass inspection. The company has 15,000 such units that cost $6 per unit to manufacture. The units were built to satisfy a special order, which must still be satisfied if the defective units are scrapped. The units can be sold as scrap for $2.50 each or they can be reworked for $4.50 each and sold for the full price of $9.00 each. If the units are sold as scrap, the company will have to build 15,000 replacement units and sell them at the full price.
Required:
(1) What is the net return from selling the units as scrap?
(2) What is the net return from reworking and selling the units?
(3) Should the company sell the units as scrap or rework them?

Recognize different methods of shaping sheet metal without cutting or shearing.

Know how to specify material size and requirements for sheet metal projects.

Understand the calculation and provision for extra material in joints and seams.

Understand the significance of the front view in depicting an object's purpose and general contour.

---

Definitions:

Daughters Of Liberty

A group of women who participated in the American Revolutionary War efforts by boycotting British goods and producing homemade items to aid the patriot cause.

Spun

In a general context, it means to twist together strands to make yarn or thread, but can also refer metaphorically to presenting information in a particular way to influence perception.

Wove

A term used to describe the texture or pattern of material that has been interlaced to form a cohesive fabric, often through weaving.

Declaratory Act

A 1766 act passed by the British Parliament, asserting its right to bind the American colonies "in all cases whatsoever," including taxation, following the repeal of the Stamp Act.