Question

Tawstir comany corporation has 400 obsolte tv monitor that they carry in their inventory at the intotal cost of 576000. if these monitor are upgrade at a total cost of 170000 they can be sold for a total of 230000. As an alternative, the computers can be sold in their present condition for $40,000.

Required:
What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?

Answer 1

Answer:

the net advantage of upgrading is $20,000

Explanation:

The computation of the net advantage or disadvantage is as follows:

Sales value after upgrading $230,000

Less: current sales value      -$40,000

Incremental advantage of upgrading $190,000

Less:total cost of upgrading ($170,000)

Net advantage of upgrading $20,000

Hence, the net advantage of upgrading is $20,000