Question
Exercise 23-7 Scrap or rework LO A1 Varto Company has 12,800 units of its sole product in inventory that it produced last year at a
Exercise 23-7 Scrap or rework LO A1
Varto Company has 12,800 units of its sole product in inventory that it produced last year at a cost of $25 each. This years model is superior to last years, and the 12,800 units cannot be sold at last years regular selling price of $42 each. Varto has two alternatives for these items: (1) they can be sold to a wholesaler for $10 each, or (2) they can be reworked at a cost of $262,700 and then sold for $30 each. Prepare an analysis to determine whether Varto should sell the products as is or rework them and then sell them.
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