Disposal of assets. Answer the following questions.

1. A company has an inventory of 1,100 assorted parts for a line of missiles that has been discontinued. The inventory cost is $78,000. The parts can be either

(a) Remachined at total additional costs of $24,500 and then sold for $33,000 or

(b) Sold as scrap for $6,500. Which action is more profitable? Show your calculations.

2. A truck, costing $101,000 and uninsured, is wrecked its first day in use. It can be either

(a) Disposed of for $17,500 cash and replaced with a similar truck costing $103,500 or

(b) Rebuilt for $89,500, and thus be brand-new as far as operating characteristics and looks are concerned. Which action is less costly?

Show your calculations.