The Tolar Company has 400 obsolete desk calculators that are carried in inventory at a total cost of $26,800. If these calculators are upgraded at a total cost of $10,000, they can be sold for a total of $30,000. As an alternative, the calculators can be sold in their present condition for $11,200.
-Assume that Tolar decides to upgrade the calculators. At what selling price per unit would the company be as well off as if it just sold the calculators in their present condition?
A) $8
B) $30
C) $53
D) $67

Question

Quizplus · Accepted Answer

If Tolar decides to upgrade the calculators, the cost would be $10,000 in addition to the initial cost of $26,800, making the total cost $36,800. If they sell the calculators after upgrading for $30,000, they would incur a loss of $6,800.

The alternative is to sell the calculators in their present condition for $11,200.

To find the selling price per unit at which the company would break even, we can set up the equation:

400x + $10,000 = $11,200
where x is the selling price per unit.

Solving for x, we get:
x = $53

Therefore, the company would be as well off upgrading the calculators and selling them at a price of $53 per unit as they would selling the calculators in their present condition for $11,200. The answer is C.

The Tolar Company Has 400 Obsolete Desk Calculators That Are