Question

The Tolar Corporation has 400 obsolete desk calculators that are carried in inventory at a total cost of $576,000. If these calculators are upgraded at a total cost of $170,000, they can be sold for a total of $230,000. As an alternative, the calculators can be sold in their present condition for $40,000. What is the financial advantage (disadvantage) to the company from upgrading the calculators?

Answer 1

Answer:

$20,000

Explanation:

Given :

Total cost of inventory=  $576,000

Upgraded cost of calculator  =$170,000

Sold cost  of calculator =$230,000

Present sales cost = $40,000.

The incremental revenue of the calculator of sales can be determined by

$= Sold\ cost\ of\ calculator\ -\ Upgraded\ cost\ of\ calculator$

=$230,000 -  $170,000

=$60,000

Therefore financial advantage  to the company from upgrading to the calculators can be determined

$\ 60,000- 40,000$

=$20,000