Tawstir Corporation has 750 obsolete personal computers that are carried in inventory at a total cost of $1,102,500. If these computers are upgraded at a total cost of $49,500, they can be sold for a total of $861,750. As an alternative, the computers can be sold in their present condition for $786,375.
The sunk cost in this situation is:
$1,102,500
$861,750
$786,375
$49,500
Tawstir Corporation has 300 obsolete personal computers that are carried in inventory at a total cost of $432,000. If these computers are upgraded at a total cost of $120,000, they can be sold for a total of $180,000. As an alternative, the computers can be sold in their present condition for $30,000.
What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?
$480,000 disadvantage$150,000 advantage$30,000 advantage$60,000 advantage
Weston Corporation is considering eliminating a department that has a contribution margin of $70,000 and $140,000 in fixed costs. Of the fixed costs, $100,000 cannot be avoided. The effect of eliminating this department on Weston's overall net operating income would be:
an increase of $70,000. a decrease of $70,000. an increase of $30,000. a decrease of $30,000.