Question

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 $170,000, they can be sold for a total of $230,000. 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? multiple choice $180,000 $10,000 ($730,000) ($60,000)

Answer 1

The Tolar Corporation would have a $10,000 financial advantage by upgrading obsolete desk calculators and selling them, as opposed to selling them in their current condition.

Step-by-step explanation:

The Tolar Corporation is considering whether to upgrade obsolete desk calculators at a cost or sell them as is. To calculate the financial advantage or disadvantage, compare the net proceeds from the two options:

• Selling without upgrade: $50,000 revenue.
• Cost of upgrading: $170,000.
• Revenue after upgrading: $230,000.

Subtracting the cost of upgrading from the revenue after upgrading gives us $230,000 - $170,000 = $60,000. Now, subtract the revenue from selling without an upgrade from the $60,000 to get the financial advantage (or disadvantage): $60,000 - $50,000 = $10,000.

Upgrading the calculators would give the Tolar Corporation a financial advantage of $10,000.