Fancy Furniture produced a batch of 2,000 coffee tables at a cost of $355,000. It was discovered that the entire batch was finished improperly. Fancy can sell the tables as seconds for $305,000 or spend an additional $315,000 to refinish them and sell them for $605,000.

1) In deciding whether to rework the tables or sell them as is, management should:

Multiple Choice

• Compare the $305,000 proceeds from the sale of the tables as is, with the $355,000 cost of the tables.

• Compare the $605,000 possible revenue from refinished tables with the total cost of $355,000 plus $315,000 to refinish.

• Compare the $315,000 cost to refinish the tables with the incremental revenue of $300,000 if the tables are refinished.

• Eliminate any alternative that results in a loss on the sale of the product.

2) Which of the following is not relevant to management's decision regarding refinishing the tables or selling them as is?

Multiple Choice

• The additional $300,000 revenue that can be generated if the tables are refinished.

• The $355,000 manufacturing cost of the tables already incurred.

• The additional $315,000 cost to refinish the tables.

• The effect of selling "seconds" on Fancy's reputation as a fine-furniture manufacturer.