The Tolar Corporation has 400 obsolete desk calculators that are carried in inve

Question

The Tolar Corporation has 400 obsolete desk calculators that are carried in inventory at a total cost of $576,000. If these calculators are upgraded at a total cost of $110,000, they can be sold for a total of $170,000. As an alternative, the calculators can be sold in their present condition for $40,000.

Assume that Tolar decides to upgrade the calculators. At what selling price per unit would the company be as well off as if it just sold the calculators in their present condition?

Multiple Choice

$375 per calculator

$55 per calculator

$308 per calculator

$120 per calculator

Explanation / Answer

Let the selling price be x

We have to find the indifference point in both the conditions

So, 400*X - $110,000 = $40,000

400*X = $150,000

X = $375

The initial cost is not relavant and same for both the conditions.

Ans is option 1 = $375 per calculator.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.