Coronado Industries has old inventory on hand that cost $9750. Its scrap value is $13000. The...
Coronado Industries has old inventory on hand that cost $9750. Its scrap value is $13000. The inventory could be sold for $32500 if manufactured further at an additional cost of $9750. What should Coronado do?
a. Manufacture further and sell it for $32500
b. Sell the inventory for $13000 scrap value
c. Hold the inventory at its $9750 cost
d. Dispose of the inventory to avoid any further decline in value
Homework Answers
Solution:
Profit from Further Processing = $32500 - $9750 = $22,750
Scrap Value = $13,000
Since Profit from further processing is higher than scrap value therefore, Coronado industries should manufacture further and sell it for $32,500.
Hence option "a" is correct.
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Coronado uses the periodic method of recording inventory. A
physical count reveals $305,357 of inventory on hand at December
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2.
Not included in the physical count of inventory is $17,446 of
merchandise purchased on December 15 from Browser. This merchandise
was shipped f.o.b. shipping point on December 29 and arrived...
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