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Golden Carpet produced 1,186 yards of its economy-grade carpet. In the coloring process, there was a pigment defect, and the resulting color appeared to be
Golden Carpet produced 1,186 yards of its economy-grade carpet. In the coloring process, there was a pigment defect, and the resulting color appeared to be faded. The carpet normally sells for $13 per yard: $6 of variable cost per yard and $5 of fixed cost per yard have been assigned to the carpet. The company realizes that it cannot sell the carpet for $13 per yard through its normal channels, unless the coloring process is repeated. The incremental cost of the process is $2 per yard. However, Practical Home Solutions is willing to buy the carpet in its current faded condition for $9 per yard. Should Golden repeat the coloring process or sell the carpet to Practical Home Solutions? n should repeat the coloring process Total incremental benefit is $
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