help me solve this please Truck Components has an inventory of 500 obsolete remo

Question

help me solve this please

Truck Components has an inventory of 500 obsolete remote entry keys that are carried in inventory at a manufacturing cost of $77,500. Production supervisor Sandy James must decide to do one of the following Process the inventory further at a cost of $32,000, with the expectation of selling it for $34,000 Scrap the inventory for a sales price of $4,000 What should James do? Present figures to support your decision Prepare the Sell or Process Further analysis. (Enter a "O" for any zero amounts Use a minus sign or parentheses when the scrap amount exceeds the process further amount.) armount exceeds the process amount) Sell As Is Process Incremental Analysis Sell of Process Further Decision (Scrap)Further Difference Revenues Less Extra cost of processing further Net benefit (loss) to operating income James should [ ]because processing further wil ?- ?operating income by SL

Explanation / Answer

Incremental analysis :

James should Sell as is because processing further will decrease operating income by $2000

Sell as is Process further Difference Revenues 4000 34000 30000 Less: Extra cost of processing further 32000 -32000 Net benefit (loss) to operating income 4000 2000 -2000

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