A company has an inventory of 1,100 assorted parts for a line of missiles that has been discontinued: Accounting Homework, NUS, Singapore

A company has an inventory of 1,100 assorted parts for a line of missiles that has been discontinued. The inventory cost is $78,000. The parts can be either (a) remachined at total additional costs of $24,500 and then sold for $33,000 or (b) sold as scrap for $6,500. Which action is more profitable?

A truck, costing $101,000 and uninsured, is wrecked on its first day in use. It can be either (a) disposed of for $17,500 cash and replaced with a similar truck costing $103,500 or (b) rebuilt for $89,500, and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly?

DeCesare Computers makes 5,200 units of a circuit board, CB76 at a cost of $280 each. Variable cost per unit is $190 and fixed cost per unit is $90. Peach Electronics offers to supply 5.200 units of CB76 for $260. If DeCesare buys from Peach it will be able to save $10 per unit in fixed costs but continue to incur the remaining $80 per.