Question

The Tolar Corporation has 400 obsolete desk calculators that are carried in inventory at a total cost of $576,000. 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 $40,000. What is the financial advantage (disadvantage) to the company from upgrading the calculators?

Answer 1

$20,000

Step-by-step explanation:

Given :

Total cost of inventory= $576,000

Upgraded cost of calculator =$170,000

Sold cost of calculator =$230,000

Present sales cost = $40,000.

The incremental revenue of the calculator of sales can be determined by

`= Sold\ cost\ of\ calculator\ -\ Upgraded\ cost\ of\ calculator\`

=$230,000 - $170,000

=$60,000

Therefore financial advantage to the company from upgrading to the calculators can be determined

`$\ 60,000- $40,000\\`

=$20,000