A truck costing 100000 and uninsured is wrecked its first, Ask an Expert

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1. A company has an inventory of 1,000 assorted parts for a line of missiles that has discontinued. The inventory cost is $75,000. The parts can be either (a) re-machined at total additional costs of $25,000 and then sold for $30,000 or (b) sold as scrap for $3,000. Which action is more profitable? Show your calculations.

2. A truck, costing $100,000 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for $15,000 cash and replaced with a similar truck costing $105,000 or (b) rebuilt for $85,000, and thus be brand -new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M960997

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