Assuming That the MR Corporation Has an Inventory of 200

question 10

True/False

Assuming that the MR Corporation has an inventory of 200 defective motors costing $450,000 to produce and $150,000 to repair,the repaired units can be sold for $425,000.The company receives an offer to purchase these motors for $325,000 before repairing them.The company's decision should be to sell the motors at the offered price.
The $450,000 production costs are sunk costs and therefore irrelevant to the decision.Net proceed from the sale of repaired units is $275,000 (Proceeds from sale of reworked units $425,000 - relevant costs for repair $150,000)compared to the offer to purchase for $325,000.Since the offer price is more than the net proceed from the sale of repaired units,the decision should be to sell the motors at the offered price.

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Definitions:

Axons

Long, slender projections of nerve cells which conduct electrical impulses away from the neuron's cell body.

Rough Endoplasmic Reticulum

A network of membranous tubules within the cytoplasm of a cell, studded with ribosomes involved in protein synthesis and folding.

Autonomic Nervous System

Controls involuntary physiological functions, including heart rate, blood pressure, digestion, and respiratory rate, operating mostly subconsciously.

Somatic Nervous System

Composed of nerve fibers that send impulses from the central nervous system to skeletal muscle.