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Gordon Corporation inadvertently produced 10,000 defective digital watches. The watches cost $8 each to produce. A salvage company will purchase the defective units as they
Gordon Corporation inadvertently produced 10,000 defective digital watches. The watches cost $8 each to produce. A salvage company will purchase the defective units as they are for $3 each. Gordon's production manager reports that the defects can be corrected for $5 per unit, enabling them to be sold at their regular market price of $12.50. Gordon should:
Multiple Choice
- Sell the watches for $3 per unit.
- Correct the defects and sell the watches at the regular price.
- Sell the watches as they are because repairing them will cause their total cost to exceed their selling price.
- Sell 5,000 watches to the salvage company and repair the remainder.
- Throw the watches away.
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