Saved Help Save & Exit MC Qu. 47 Chang Industries has... Chang Industries has 2.

Question

Saved Help Save & Exit MC Qu. 47 Chang Industries has... Chang Industries has 2.500 defective units of product that have already cost $14.50 each to produce. A salvage company will purchase the defective units as they are for $5.60 each. Chang's production manager reports that the defects can be corrected for $5.50 per unit, enabling them to be sold at their regular market price of $22.00. The incremental income or loss on reworking the units is: 5 Multiple Choice $27,250 loss. $27,250 income. $13,750 loss

Explanation / Answer

had these 2500 units not been defective , additional cost of 5.5 per unit will not be incurred

therefore , 2500*5.5 = $13,750 loss to chang industries

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