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The Lily Corporation has 8,000 obsolete units of a product that are carried in inventory at a manufacturing cost of $160,000. If the units are

The Lily Corporation has 8,000 obsolete units of a product that are carried in inventory at a manufacturing cost of $160,000. If the units are re-machined for $40,000, they could be sold for $72,000. Alternatively, the units could be sold for scrap for $28,000.

Requirement:

Which alternative is more desirable and what are the total relevant costs for that alternative?

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