Tingey Company: what is the net effect to the company by upgrading a product
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Question
The Tingey Company has 400 obsolete microcomputers that are carried in inventory at a total cost of $576,000. If these microcomputers are upgraded at a total cost of $170,000, they can be sold for a total of $230,000. As an alternative, the microcomputers can be sold in their present condition for $40,000.
What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?
a. $190,000 advantage
b. $60,000 advantage
c. $20,000 advantage
d. $630,000 disadvantage
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