Dispose it off as scrap at zero net cost

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Reference no: EM131123037

Image for A company has carried a few hundred units of product XYZ in its inventory since 2012. Per-unit cost informatio

Show transcribed image text A company has carried a few hundred units of product XYZ in its inventory since 2012. Per-unit cost information for this product is: Direct material = $100 Direct labor = $40 Variable overhead = $28 Fixed overhead = $70 Total cost per unit = $238 Since the product is falling out of demand. the following options are being evaluated:

1. Dispose it off as scrap at zero net cost (i.e.. proceeds from scrap will cover the disposal cost)

2. Sell at $24 per unit to a distributor in another country.

3. Rework each unit at a new cost of $90 and then sell it as product POR for $400 per unit.

4. Not worry about XYZ at all: instead focus attention on making product POR from scratch at a per-unit cost of $250. There is enough amount of additional resources to either rework XYZ as above or make POR from scratch. Please assess the net monetary benefit of each of the four options and advise the company on the best option to choose. based only on monetary considerations. Show each assessment with computation.

Reference no: EM131123037

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