Question

More Parts Liquidators specializes in buying excess parts inventories for resale or to incorporate into other products. They recently purchased parts for $200,000 and they have a buyer willing to pay $240,000. The company can also incorporate these parts into a new product at a cost of $150,000 and sell the new product for $380,000. What should More Parts Liquidators do? Parts Only New Product wiParts Incremental Sales Revenue Cost of Parts Additional Costs Profit/ loss More Parts should

Answer 1

	Parts only Amount in $	New Products w/ parts Amount in $	Incremental Amount in $
Sales Revenue	240000	380000	140000
Cost of parts	200000	200000	0
Additional costs	0	150000	150000
Profit/(Loss)	40000	30000	-10000
More parts should	Sell the parts only as there is an incremental loss of $ 10,000 if the parts are incorporated in the new product
Please do upvote if you found the answer useful.
Feel free to reach in the comment section in case of any clarification or queries.