Wenig Inc Has Some Material That Originally Cost $73,500

question 58

Multiple Choice

Wenig Inc. has some material that originally cost $73,500. The material has a scrap value of $45,600 as is, but if reworked at a cost of $6,600, it could be sold for $58,100. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as is as scrap?

• A)decrease of $22,000
• B)decrease of $67,600
• C)increase of $51,500
• D)increase of $5,900

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Definitions:

Marginal Cost

The increment in comprehensive expenses related to the generation of an extra unit of a good or service.

Total Benefit

The entire satisfaction or value derived from consuming a good or service.

Optimal Quantity

The quantity of production that maximizes a firm's profit or minimizes its costs under certain conditions.

Free-Rider Problem

The inability of potential providers of an economically desirable good or service to obtain payment from those who benefit, because of nonexcludability.