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A job of 2,500 light bulbs manufactured by Flashlight Corp. contains defective parts. The cost incurred in manufacturing these defective units is $250,000. Flashlight Corp.
A job of 2,500 light bulbs manufactured by Flashlight Corp. contains defective parts. The cost incurred in manufacturing these defective units is $250,000. Flashlight Corp. can sell these units as scrap materials for $60 per unit or repair all 2,500 units at a total cost of $180,000. If the units are repaired, they can be sold at the normal price of $177 per unit. What will be the total amount of the loss incurred by Flashlight Corp. on the sale of these units if they are sold for scrap at $60 per unit? 1 2 What will be the average per-unit manufacturing cost of the Light Bulbs, including repair costs, assuming that Flashlight Corp. does the repairs? 3 What will be the total amount of the loss incurred by Flashlight Corp. on the sale of these units if they are repaired and sold for $177 per unit? 4 What is the relevant cost to Flashlight Corp. in deciding whether or not to repair the units? (State this cost as a total amount for all 2,500 units.) 5 Should Flashlight Corp. (1) sell the units for scrap or (2) repair the units? (Show calculation to support your decision)
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