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Best Clothing, Inc., produces uniforms for school children. Best Clothing sells all the fabric scrap to fabric warehouses. One of the warehouses purchases each
Best Clothing, Inc., produces uniforms for school children. Best Clothing sells all the fabric scrap to fabric warehouses. One of the warehouses purchases each pound of fabric scrap for $3.25. This year, company sold 40,000 pounds of fabric scrap. 40,000 pounds of fabric scrap are enough to make 10,000 stuffed animals and now the management at Best Clothing is considering to producing their own stuffed animals with leftover fabric scrap instead of selling. The management estimates the variable costs of $3.85 per stuffed animal and that fixed costs will increase by $95,000 due to changes in restructuring and additional processing, but the stuffed animals can be sold for $18.00 each. If the company could produce and sell 10,000 stuffed animals each year, should Best Clothing continue to sell the fabric scrap or should Best process the scrap into stuffed animals to sell? O Process further, the company will be better off by $11.500 O Sell now, the company will be better off by $83,500 O Sell now, the company will be better off by $45,000 O Process further, the company will be better off by $50,000
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