The Manufacturing Cost of 5100 Denim Jackets is a sunk cost and hence irrelevant in decision making.
Calculating Incremental Income for each alternative
Alternative 1. Sell to a secondhand shop | ||
Particulars | Calculations | Amount ($) |
Incremental Revenue | ( $8 x 5100) | $40,800 |
Less:- Incremental Costs | $0 | |
Incremental Incomes | $40,800 | |
Alternative 2. Disassemble and sell to a recycler. | ||
Particulars | Calculations | Amount ($) |
Incremental Revenue | ( $11 x 5100) | $56,100 |
Less:- Incremental Costs | Given | $31,500 |
Incremental Incomes | $24,600 | |
Alternative 3. Rework and sell at regular prices. | ||
Particulars | Calculations | Amount ($) |
Incremental Revenue | ( $44 x 2910) | $128,040 |
Less:- Incremental Costs | Given | $102,700 |
Incremental Incomes | $25,340 |
Recommendation :- The best alternative is to sell 5100 Denim jackets (damaged) to the secondhand clothing shop at $8.00 each.
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Harold Manufacturing produces denim clothing. This year, it produced 5,140 denim jackets at a manufacturing cost of $41.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. 1. Jackets can be sold to a secondhand clothing shop for $8.00 each. 2. Jackets can be disassembled at a cost of $32,200 and sold to a recycler for $11.00 each. 3. Jackets can be reworked and turned into good jackets....
10-4A Harold Manufacturing produces denim clothing. This year, it produced 5,280 denim jackets at a manufacturing cost of $41.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. 1. Jackets can be sold to a secondhand clothing shop for $700 each 2. Jackets can be disassembled at a cost of $31,100 and sold to a recycler for $12.00 each 3. Jackets can be reworked and turned into good...
Harold Manufacturing produces denim clothing. This year, it produced 5,120 denim jackets at a manufacturing cost of $42.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. 1.Jackets can be sold as is to a secondhand clothing shop for $7.00 each. 2.Jackets can be disassembled at a cost of $32,900 and sold to a recycler for $12.00 each. 3.Jackets can be reworked and turned into good jackets. However,...
Harold Manufacturing produces denim clothing. This year, it produced 5,220 denim jackets at a manufacturing cost of $42.00 each These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets 1. Jackets can be sold as is to a secondhand clothing shop for $700 each 2. Jackets can be disassembled at a cost of $31,300 and sold to a recycler for $11.00 each 3. Jackets can be reworked and turned into...
Problem 23-4A Sell or process LO A1 Harold Manufacturing produces denim clothing. This year, it produced 5,180 denim jackets at a manufacturing cost of $41.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. 1. Jackets can be sold to a secondhand clothing shop for $7.00 each. 2. Jackets can be disassembled at a cost of $33,000 and sold to a recycler for $11.00 each. 3. Jackets can...
Harold Manufacturing produces denim clothing. This year, it produced 5,260 denim jackets at a manufacturing cost of $41.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. Jackets can be sold to a secondhand clothing shop for $7.00 each. Jackets can be disassembled at a cost of $31,400 and sold to a recycler for $11.00 each. Jackets can be reworked and turned into good jackets. However, with the...
Problem Harold Manufacturing produces denim clothing. This year, it produced 5,000 denim jackets at a manufacturing cost of $45 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. 1. Jackets can be sold to a second-hand clothing shop for $6 each. 2. Jackets can be disassembled at a cost of $32,000 and sold to a recycler for $12 each. 3. Jackets can be reworked and turned into good...