Question
Hip Manufacturing produces denim clothing. This year it produced 3,380 denim jackets at a cost of $101,400. These jackets were damaged in the warehouse during
Hip Manufacturing produces denim clothing. This year it produced 3,380 denim jackets at a cost of $101,400. These jackets were damaged in the warehouse during storage. Management identified three alternatives for these jackets.Jackets can be sold as scrap to a secondhand clothing shop for $20,280.Jackets can be disassembled at a cost of $6,760 and sold to a recycler for $40,560.Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be $114,920, and the jackets can then be sold for $152,100.
Required:
(1) Compute the income for each alternative.
(2) Which alternative should be chosen?
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