230k views
1 vote
The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calculators are upgraded at a total cost of $140,000, they can be sold for a total of $200,000. As an alternative, the calculators can be sold in their present condition for $50,000. What is the financial advantage (disadvantage) to the company from upgrading the calculators?

User Reptilicus
by
9.4k points

1 Answer

5 votes

Answer:

It is more profitable to upgrade the calculators.

Step-by-step explanation:

Giving the following information:

The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calculators are upgraded at a total cost of $140,000, they can be sold for a total of $200,000. As an alternative, the calculators can be sold in their present condition for $50,000.

We need to determine whether it is more convenient to upgrade the calculators or sell them as they are.

Upgrade:

Effect on income= 200,000 - 720,000 - 140,000= -$660,000

Not upgrade:

Effect on income= 50,000 - 720,000= -$670,000

It is more profitable to upgrade the calculators.

User CrownFord
by
8.2k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.