48 Stooge Enterprises manufactures ceiling fans that normally sell for $93 each.

Question

48 Stooge Enterprises manufactures ceiling fans that normally sell for $93 each. There are 340 defective fans in inventory, which cost $59 each to manufacture. These defective units can be sold as is for $23 each, or they can be processed further for a cost of $41 each and then sold for the normal selling price. Stooge Enterprises would be better off by a O A. $9,860 net increase in operating income if the ceiling fans are repaired. OB. $23,800 net increase in operating income if the ceiling fans are sold as is. C. $23,800 net increase in operating income if the ceiling fans are repaired. 0 D. $9,860 net increase in operating income if the ceiling fans are sold as is.

Explanation / Answer

Answer: A

Explanation:

Sale price of defective fan after repair (340*93) = 31620

Less: cost to repair the defective unit (340*41). = 13940

Less: normal selling price if not repaired(340*23)=7820

Net increase in operating income if repaired . = 9860

Hence the answer is A

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