What is the relevant cost for that alternative

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Reference no: EM13795330

Allegiance, Inc. has $149,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $55,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $27,000. There the goods could be sold for $104,000. What alternative is more desirable and what is the relevant cost for that alternative?

Sell "as is," $149,000.

Clean and ship to outlet center, $27,000.

Clean and ship to outlet center, $131,000.

Clean and ship to outlet center, $176,000.

Neither alternative is desirable, as both produce a loss for the firm.

Reference no: EM13795330

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