Armstrong Corporation manufactures bicycle parts. The company currently has a $19,100 inventory of parts that have become obsolete due to changes in design specifications. The parts could be sold for $6,900, or modified for $9,700 and sold for $20,900.

Exercise 14-35 Part 1

Required:

1. Identify the relevance of the data given in the exercise to the decision about what to do with the obsolete parts.

2.

Exercise 14-35 Part 2

2-a. Calculate the benefit under each alternative for disposing of the obsolete parts.

2-b. How should the obsolete parts be disposed?

Current sales value for unmodified parts Sales value for modified parts Modification costs Current book value of inventory Benefit if parts are sold without modification | Net benefit if parts are sold after being modified How should the obsolete parts be disposed