Should the game machines be upgraded

Assignment Help Accounting Basics

Reference no: EM132853764

Atari Upgrade or Sell

Atari Corp. has 2,000 obsolete game machines that cost $300,000 to manufacture.

The game machines can be upgraded with a new chip at a total cost of $100,000. They could then be sold for $80 each.
This is much less than the $200 we have now put into each machine.

($300,000 + $100,000) / 2,000 machines = $200 each

Or they can be sold 'as is' for a total of $35,000 to a parts dealer.

REQUIRED:

A) Should the game machines be upgraded?
B) If they are upgraded, what is the opportunity cost?

Reference no: EM132853764

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