9 Fancy Furniture produced a batch of 2,000 coffee tables at a cost of $355,000.

Question

9 Fancy Furniture produced a batch of 2,000 coffee tables at a cost of $355,000. It was discovered that the entire batch was finished improperly. Fancy can sell the tables as seconds for $305,000 or spend an additional $315,000 to refinish them and sell them for $605,000. In deciding whether to rework the tables or sell them as is, management should: 2.85 points Multiple Choice Compare the $305,000 proceeds from the sale of the tables as is, with the $355,000 cost of the tables. Compare the $605,000 possible revenue from refinished tables with the total cost of $355,000 plus $315,000 to refinish. Compare the $315,000 cost to refinish the tables with the incremental revenue of $300,000 if the tables are refinished. Eliminate any alternative that results in a loss on the sale of the product.

Explanation / Answer

Answer - "Compare the $315,000 cost to refinish the tables with the incremental revenue of $300,000 if the tables are refinished"

This means that even though your revenues would increase by $300,000 if you refinish the tables, the extra cost to refinish them would cause you to lose $15,000 more than if you didn't refinish them.

Related Questions

Navigate

• Browse (All)
• Browse 9
• Subjects

---

---

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