Truck Components has an inventory of 480 obsolete remote entry keys that are car

Question

Truck Components has an inventory of 480 obsolete remote entry keys that are carried in inventory at a manufacturing cost of $78,240. Production supervisor Ricky Lewis must decide to do one of the following and Process the inventory further at a cost of $25,000, with the expectation of selling it for $34,000 Scrap the inventory for a sales price of $6,000 What should Lewis 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.) Incremental Analysis Sell As Is Process Sell of Process Further Decision (Scrap)FurtherDifference Revenues Less: Extra cost of processing further Net benefit (loss) to operating income Lewis should because processing further will operating income by $ Alo the abe O L. Nans ofthe at

Explanation / Answer

Sell as is Process further Difference Revenues 6000 34000 28000 Less: Extra cost of processing further 0 25000 -25000 Net benefit(loss) to operating income 6000 9000 3000 Lewis should process further as processing further will increase operating income by $3000

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