A company has an inventory of 1,000 assorted parts for a line of missiles that has been discontinued.

The inventory cost is $89000. The parts can be either (a)retooled at a total additional costs of $33000 and then sold for $137,400 or (b) sold as scrap for $104,400.

A. Explain which action would be more profitable for the company?

B. Which would you recommend?

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