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A company has 33,000 units - Resale or rework?

A company has 33,000 units of its sole product that it produced last year at a cost of $71 each. This year's model is superior to last year's and the 33,000 units cannot be sold for their regular selling price of $127 each. The company has two alternatives for these items: (1) they can be sold to a wholesaler for $45 each, or (2) they can be reworked at a total cost of $700,000 and then sold for $53 each. The company has enough idle capacity to rework these items without affecting any new production. Which choice would increase the company's profits the most? Show your analysis.

Solution Preview

Your tutorial is in excel, attached, and shows two analyses for the two alternatives. The two irrelevant costs are mentioned.

units from last year ...

Solution Summary

Your tutorial is in excel, attached, and shows two analyses for the two alternatives. The two irrelevant costs are mentioned.

$2.19