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24 November, 03:29

The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calculators are upgraded at a total cost of $140,000, they can be sold for a total of $200,000. As an alternative, the calculators can be sold in their present condition for $50,000. What is the financial advantage (disadvantage) to the company from upgrading the calculators?

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  1. 24 November, 03:57
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    It is more profitable to upgrade the calculators.

    Explanation:

    Giving the following information:

    The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calculators are upgraded at a total cost of $140,000, they can be sold for a total of $200,000. As an alternative, the calculators can be sold in their present condition for $50,000.

    We need to determine whether it is more convenient to upgrade the calculators or sell them as they are.

    Upgrade:

    Effect on income = 200,000 - 720,000 - 140,000 = - $660,000

    Not upgrade:

    Effect on income = 50,000 - 720,000 = - $670,000

    It is more profitable to upgrade the calculators.
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Home » Business » The Tolar Corporation has 500 obsolete desk calculators that are carried in inventory at a total cost of $720,000. If these calculators are upgraded at a total cost of $140,000, they can be sold for a total of $200,000.
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