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Armstrong Corporation manufactures bicycle parts. The company currently has a $18,900 inventory of parts that have become obsolete due to changes in design specifications. The parts could be sold for $6,700, or modified for $9,500 and sold for $20,500.

Identify the relevance of the data given in the exercise to the decision about what to do with the obsolete parts.

Current sales value for unmodified parts
Sales value for modified parts
Modification costs
Current book value of inventory

Calculate the benefit under each alternative for disposing of the obsolete parts.

Benefit if parts are sold without modification
Net benefit if parts are sold after being modified