Using Differential Analysis: Memory Corporation has 1,000 obsolete 4 meg DRAMS, which are carried in inventory at

Question:

Using Differential Analysis: Memory Corporation has 1,000 obsolete 4 meg DRAMS, which are carried in inventory at a cost of $20,000. If the DRAMS are remachined for $5,000, they could be sold for $9,000. If the DRAMS are scrapped, they could be sold for $1,000.

Required: What is the optimal alternative? What costs are differential?

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