Question

Cincinnati Manufacturing recently completed a project and has $74,600 of excess material. Cincinnati Manufacturing can sell the material for $57,400 as is. Or, they can reworked the material at a cost of $1,500. After the rework, they can sell the material for $54,400. What is the financial consequence of selling the reworked material instead of selling the material as is

Answer 1

It is a better deal to sell the materials directly as is.

sales -17,200

rework -21,700

rework differential income -4,500

Step-by-step explanation:

`\left[\begin{array}{cccc}&Sale&Rework&Differential\\Cost&-74,600&-74,600&0\\REWORK&&-1,500&-1,500\\Total&-74,600&-76,100&-1,500\\Proceeds&57,400&54,400&-3,000\\Result&-17,200&-21,700&-4,500\\\end{array}\right]`

the financial consequence of rework will be a differential loss of 4,500

It is a better deal to sell the materials directly as is.