Granger Company Makes Portable DVD Players

question 63

Multiple Choice

Granger Company makes portable DVD players. In its inventory, Granger found 200 DVD players that had become obsolete. Each DVD player has a cost of $100. Granger can upgrade these DVD players for $15 each after which they can be sold at a cost of $40 each. Granger has also received an offer to sell the DVD players, as is, for a total of $4,000. Compared to just selling the 200 DVD players for a total of $4,000 as they are, what is the net increase (decrease) in operating income if Granger upgrades the DVD players and then sells them?

• A) $1,000 decrease
• B) $1,000 increase
• C) $5,000 decrease
• D) $5,000 increase

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