Tawstir Corporation has 500 obsolete personal computers that are carried in inve

Question

Tawstir Corporation has 500 obsolete personal computers that are carried in inventory at a total cost of $720,000. If these computers are upgraded at a total cost of $140,000, they can be sold for a total of $200,000. As an alternative, the computers can be sold in their present condition for $50,000.

What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?

$10,000 advantage

$700,000 disadvantage

$150,000 advantage

$60,000 advantage

Tawstir Corporation has 500 obsolete personal computers that are carried in inventory at a total cost of $720,000. If these computers are upgraded at a total cost of $140,000, they can be sold for a total of $200,000. As an alternative, the computers can be sold in their present condition for $50,000.

Explanation / Answer

Advantage/ Disadvantage from upgrading the computers rather than selling them in their present condition

Net Profit in upgrading = 200000-140000 = $ 60000

Advantage = 60000-50000 = $ 10000

The correct answer is $ 10000 advantage

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