The Tingey Company has 500 obsolete microcomputers that are carried in inventory

Question

The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $720,000.

If these microcomputers are upgraded at a total cost of $100,000, they can be sold for a total of $160,000.

As an alternative, the microcomputers can be sold in their present condition for $50,000.

Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition?
1) $100.
2) $770.
3) $300.
4) $210.
show work please

Explanation / Answer

$300

The selling price of the upgraded computers would have to cover the opportunity cost of $50,000 for selling the computers as is as well as the $100,000 cost of upgrading.
The point of indifference would be $150,000

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