Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5. The Huffman Tire Company has 3,000 tires in its inventory which are considered obsolete. Each unit originally cost the company $35. Management is considering

image text in transcribed
5. The Huffman Tire Company has 3,000 tires in its inventory which are considered obsolete. Each unit originally cost the company $35. Management is considering options to reduce these inventory levels. Units can be sold directly to car dealerships for $30 per tire as opposed to the normal selling price of $45 per tire. The other option is to offer their current customers a $10 per tire rebate on their purchase. In addition to the $10 rebate, the program would cost the company approximately $24,000 to manage. They predict that either option will rid them completely of their excess The decision to sell directly to the car dealerships over offering the rebate will result in: A. A $21,000 increase in profits. B. A $9,000 increase in profits. C. A $15,000 decrease in profits. D. A $24,000 decrease in profits

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions