Harold Manufacturing produces denim clothing. This year, it produced 5,200 denim

Question

Harold Manufacturing produces denim clothing. This year, it produced 5,200 denim jackets at a manufacturing cost of $41.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets. 1. Jackets can be sold to a secondhand clothing shop for $8.00 each. 2. Jackets can be disassembled at a cost of $32,400 and sold to a recycler for $11.00 each. 3. Jackets can be reworked and turned into good jackets. However, with the damage, management estimates it will be able to assemble the good parts of the 5,200 jackets into only 3,060 jackets. The remaining pieces of fabric will be discarded. The cost of reworking the jackets will be $102,600, but the jackets can then be sold for their regular price of $45.00 each Required: 1. Calculate the incremental income. Alternative 1 Alternative 3 Alternative 2 Sell to a second Disassemble and Rework and sell hand shop sell to a recycler at regular prices Incremental revenue Incremental costs Incremental income

Explanation / Answer

Calculate incremental income :

Alternative 1: Sell to a second hand shop

Alternative 1: Sell to a second hand shop

Alternative 2: Disassemble and sell to a recycler Alternative 3: Rework and sell at regular pricess Incremental revenue 5200*8 = 41600 5200*11 = 57200 3060*45 = 137700 Incremental costs 0 -32400 102600 Incremental income 41600 24800 35100 The company should Sell to a second hand shop

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.