Question
BT&T Corporation manufactures telephones. Recently, the company produced a batch of 660 defective telephones at a cost of $9,600. BT&T can sell these telephones as
BT&T Corporation manufactures telephones. Recently, the company produced a batch of 660 defective telephones at a cost of $9,600. BT&T can sell these telephones as scrap for $9 each. It can also rework the entire batch at a cost of $7,100, after which the telephones could be sold for $20 per unit.
If BT&T reworks the defective telephones, by how much will its operating income change?
Multiple Choice
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Decrease by $6,100
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Increase by $6,100
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Decrease by $3,500
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Increase by $7,260
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
15th edition
978-1118159644, 9781118562185, 1118159640, 1118147294, 978-1118147290
