Holl d. Net benefit forgone 15. The Lantern Corporation has 1,000 obsolete lante

Question

Holl d. Net benefit forgone 15. The Lantern Corporation has 1,000 obsolete lanterns that are C. carried in inventory at a manufacturing cost of $20,000. If the lanterns are re-ma they could be sold for $9,000. Alternatively, the lanterns could he for $1,000. Which alternative is more desirable and what are costs for the alternative? a. Re-machine; $5,000. b. Re-machine; $25,000. c. Scrap; $20,000. d. Scrap; $19,000. 16. Ruggles Circuit Company manufactures circuit boards for other firms. manufacturing costs and Management is attempting to search for ways to reduce has received a proposal from a consulting company to rearrange the production floor nest year. Using the information below regarding current operations and the new proposal, which of the following decisions should management accept? Currently Proposed Required Machine Operators Materials Handling Workers Employee Average Pay Hours Worked Per Employee 1.25 $8 Per Hour 2,100 4.5 1.25 $9 Per Hour 2,000 Do not rearrange the production floor. Rearrange the production floor Either, because it makes no difference to the employees. It doesn't matter because the costs incurred will remain the same.

Explanation / Answer

Lantern Corporation :a.Remachine;$5000

Sale price - remachining cost = 9000 - 5000 = 4000

Ruggles Circuit Company :b.Rearrange the production floor

Current Operation :5 Workers x 2100 hours x $8 = $84000

Proposal : 4.5 Workers x 2000 hours x $9 = $81000

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