23 6 Help Save & Exit Sub that it produced last year at a cost of $22 each. This

Question

23 6 Help Save & Exit Sub that it produced last year at a cost of $22 each. This year's model ls Varto Company has 7,000 units of its sole product in inventory superior to last year's, and the 7,000 units cannot be sold at last year's regular sell these items: (1) they can be sold to a wholesaler for $8 each or (2) they can be reworked each. Prepare an analysis to determine whether Varto should sell the products as is or rework them and then sell them. ing price of $35 each. Varto has two alternatives for at a cost of $125,000 and then sold for $25 1.25 points

Explanation / Answer

Incremental Revenue & Cost of Additional Processing 1 Revenue if processed further 25*7000 175000 2 Revenue if sold as is 8*7000 56000 3 Incremental Revenue (1)-(2) 119000 4 Cost of Additional Processing Given 125000 5 Incremental Net Income(Loss) (3)-(4) -6000 The company should Sell its product to the wholesaler for $8 each.

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