(a) All three (b) Two of the three (c) One of the three (d) None of the three Us
ID: 2400939 • Letter: #
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(a) All three (b) Two of the three (c) One of the three (d) None of the three Use the following information to answer Questions (11) and (12) Tingley Company has 2,000 obsolete computers that are carried in inventory at a cost of $1,350,000. If these computers are upgraded at a total cost of $280,000, they can be sold for a total of $490,000. Alternatively, Tingley can sell the computers in their present condition for $225,000. (11) The sunk cost in this situation is: (a) $1,125,000 (b) $1,350,000 (c) $490,000 (d) $225,000 (e) $1,630,000 110 000 (12) Tingley should (a) should keep the computers in inventory because either alternative would result in an unacceptable loss based on the computers' original cost should upgrade the computers because the net advantage of doing so is $490,000 (e) should upgrade the computers because the net advantage of doing so is $210,000 (d) should scrap the computers because the net advantage of doing so is $15,000 36 A B C DEExplanation / Answer
11. In the given situation sunk cost is $1350000 since the cost has already been incureed& does not have any impact on futher decision making.
12.The correct answer is D - since the incremental benefit willbe $ 15000 as compared to upgrading it & then selling.
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