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Hobson Corp. has 12,000 tons of old inventory in a warehouse that originally cost $24,000 to manufacture. It could be sold as scrap to a
Hobson Corp. has 12,000 tons of old inventory in a warehouse that originally cost $24,000 to manufacture. It could be sold as scrap to a buyer in Tanzania for $9,000 minus transportation cost of $0.20 per ton. Alternatively, the 12,000 tons of old inventory could be sold here in the USA for $25,000 if it is processed further at an additional cost. Hobson processes the old inventory further. This results in an increase in Hobsons net income of $2,000. Calculate the additional processing cost of the old inventory (round to nearest $1).
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