1. The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $830,000. If these microcomputers are upgraded at a total cost of $100,000, they can be sold for a total of $160,000. As an alternative, the microcomputers can be sold in their present condition for $50,000. The sunk cost in this situation is

Question

Salma Shepard

Business

25 May, 12:48

1. The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $830,000. If these microcomputers are upgraded at a total cost of $100,000, they can be sold for a total of $160,000. As an alternative, the microcomputers can be sold in their present condition for $50,000. The sunk cost in this situation is

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Sasha Dickson · Answer 1

Answer: The sunk cost is $830,000 which is the total cost of the obsolete microcomputers in inventory

Explanation:

Sunk cost can be defined as the expenditures incurred in the past and cannot be changed no matter what action is taken. Sunk cost are irrelevant for future uses of this microcomputers. Therefore $830,000 is the sunk cost which is the total cost of the obsolete micro computers carried in inventory.