Central Medical Supply: refit obsolete testing equipment or sell it. Analyze options, Tripac
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Central Medical Supply, Inc., a manufacturer of medical testing equipment, has $240,000 worth of an obsolete line of testing equipment. The obsolete equipment can be adapted to fit another line of testing equipment at a cost of $64,000; the market value would then be $136,000. However, Tripac offered to purchase the obsolete equipment as is for $88,000.
15. Which alternative should Central select?
a. scrap the inventory at no additional cost
b. rework the inventory at an additional loss of $304,000
c. rework the inventory and improve profits by$69,000
d. sell the inventory to Tripac
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Unless there is other information regarding splitting the costs for the other line of business I would choose d. sell the inventory to ...
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