Water Works ended its busy season with an inventory of 15,000 plastic rafts that cost $180,000 to manufacture. The company has two choices. One is that it can store the rafts for six months and sell them for $8 each during the following year. Storage would cost $8,500, and Water Works knows that at least 30% of the rafts would deteriorate during storage. The deteriorated rafts would have no value. The only other alternative is to have a clearance sale now and sell the rafts for $6.20 each. Water Works believes that all of the rafts can be sold if it spends $15,000 to advertise the sale.

Required: Based on this information, prepare an analysis showing the relevant costs and revenues of each alternative, and decide which alternative Water Works should choose. TYK-1