Ahngram Corp

question 3

Multiple Choice

Ahngram Corp. has 1,000 defective units of a product that cost $3 per unit in direct costs and $6.50 per unit in indirect cost when produced last year. The units can be sold as scrap for $4 per unit or reworked at an additional cost of $2.50 and sold at full price of $12. The incremental net income (loss) from the choice of reworking the units would be:

• A) $5,500.
• B) $0.
• C) ($2,500).
• D) $9,500.
• E) $2,500.

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Definitions:

Memory Cards

Portable storage devices used for storing digital information, commonly used in cameras, smartphones, and other electronic devices.

Close-Substitute Product

A product or service that can easily replace another in satisfying consumer needs.

Demand Curve

A visual chart that illustrates the connection between a product or service's price and the amount consumers want to buy over a specific time frame.

Price

Price is the amount of money expected, required, or given in payment for something.