Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Grange Car Repairs (GCR): 13 pts GCR purchased a classic vintage car for 60,000 AUD in 2019. The car needs a new replacement engine before
Grange Car Repairs (GCR): 13 pts GCR purchased a classic vintage car for 60,000 AUD in 2019. The car needs a new replacement engine before it can be sold as a road-worthy vintage car for a premium price of 85.000 AUD. It is possible to buy a re-conditioned engine for 6000 AUD from another vintage dealer. To fix the engine, it will take about 7 hours of intensive work by a specialist mechanic Sam, who is paid an annual salary of 150,000 AUD, which works out to around 75 AUD per hour. Since such specialised labor is difficult to find, asking Sam to work on fitting the reconditioned engine would mean that Sam would not be available to generate value on another urgent job, which is likely to generate a contribution of 2500 AUD. Another alternative is to sell the vintage car as is (without fitting the reconditioned engine) for a negotiated bargain price of 70,000 AUD. Advise GCR on the profitable decision alternative (i.e. should GCR fit the engine and then sell the vintage car or sell the vintage car as is)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started