- A company has an inventory of 1,450 assorted parts for a line of missiles that has been discontinued. The inventory cost is $72,000. The parts can be either (a) remachined at total additional costs of $28,000 and then sold for $34,000 or (b) sold as scrap for $5,000. Which action is more profitable? Show your calculations.
- A truck, costing $101,500 and uninsured, is wrecked its first day in use. It can be either (a) disposed of for
14,500 cash and replaced with a similar truck costing $106,000 or (b) rebuilt for $85,000, and thus be brand- new as far as operating characteristics and looks are concerned. Which action is less costly? Show your calculations.