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Vehicle Components has an inventory of 500 obsolete remote entry keys that are carried in inventory at a manufacturing cost of $78,500. Production supervisor Lee
Vehicle Components has an inventory of 500 obsolete remote entry keys that are carried in inventory at a manufacturing cost of $78,500. Production supervisor Lee Johns must decide to do one of the following Process the inventory further at a cost of $27,000, with the expectation of selling it for $34,000 Scrap the inventory for a sales price of $5,000 What should Johns do? Present figures to support your decision Prepare the Sell or Process Further analysis. (Enter a "O" for any zero amounts. Use a minus sign or parentheses when the scrap amount exceeds the process further amount.) Incremental Analysis Sell As Is Process Sell of Process Further Decision (Scrap) Further Difference Revenues Less: Extra cost of processing further Net benefit (loss) to operating income because processing further will operating income by $ Johns should further process inventory sell as scrap increase decrease
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