Ask Question
17 March, 03:10

MC Qu. 47 Chang Industries has ... Chang Industries has 1,800 defective units of product that have already cost $13.80 each to produce. A salvage company will purchase the defective units as they are for $4.80 each. Chang's production manager reports that the defects can be corrected for $6.20 per unit, enabling them to be sold at their regular market price of $20.60. The incremental income or loss on reworking the units is: Multiple Choice $17,280 loss. $25,920 income. $11,160 loss. $28,440 income. $17,280 income.

+2
Answers (1)
  1. 17 March, 03:51
    0
    The correct answer is:

    $17,280 income

    Explanation:

    First, let us lay out the relevant information:

    Total defective units = 1800

    salvage company price per unit = $4.80

    Total income expected from salvage company = 4.8 * 1800 = $8,640

    Reworking cost per unit = $6.20

    selling price per unit after reworking = $20.60

    Net selling price per unit after reworking = selling price - reworking cost

    = 20.60 - 6.20 = $14.40

    ∴ Total income from selling after reworking = 14.4 * 1800 = $25,920

    To calculate for the increment or loss on the income gotten from both options, we will calculate the difference between both options as follows:

    Increment or loss on income from reworking = total income from reworking - total income from salvage company

    = 25,920 - 8,640 = $17,280 income. (note that a loss is not made from reworking because the total income from reworking is greater than that gotten from the salvage company)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “MC Qu. 47 Chang Industries has ... Chang Industries has 1,800 defective units of product that have already cost $13.80 each to produce. A ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers