Question

the pixalator corporation has 8,000 obsolete units of a product that are carried in inventory. if the units are re-machined for $40,000, they could be sold for $72,000. alternatively, the units could be sold for scrap for $28,000. how much more or less profit will the company get if it re-machines the products?

Answer 1

Re-machining the products would result in $4,000 more profit for the company compared to selling them for scrap.

Step-by-step explanation:

To calculate the profit difference between re-machining the obsolete units and selling them for scrap, we need to compare the costs and revenues associated with each option.

Re-machining the products costs $40,000, but it allows the company to sell the units for $72,000. The profit from re-machining would be $72,000 - $40,000 = $32,000.

Alternatively, selling the units for scrap would generate a revenue of $28,000. The profit from selling for scrap would be $28,000 - $0 = $28,000.

Therefore, the company would earn $32,000 - $28,000 = $4,000 more profit by re-machining the products.