Question

Taylor Inc. has some material that originally cost $65,500. The material has a scrap value of $56,300 as is, but if reworked at a cost of $1,750, it could be sold for $55,700. What would be the financial advantage (disadvantage) of reworking and selling the material rather than selling it as is as scrap

Answer 1

-$2,350

Step-by-step explanation:

In this question, we have to compare the cost which is shown below:

If we considered the reworked cost, then the sales would be

= Sales - reworked cost

= $55,700 - $1,750

= $53,950

And the scrap value is $56,300

So, the financial disadvantage would be

= Sales without reworked cost - scrap value

= $53,950 - $56,300

= -$2,350

All other information which is given is not relevant. Hence, ignored it