The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of £720,000. If these microcomputers are upgraded at a total cost of £100,000, they can be sold for a total of £160,000. As an alternative, the microcomputers can be sold in their present condition for £50,000.
-Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition?
A)£100.
B)£770.
C)£300.
D)£210.

Question

Quizplus · Accepted Answer

To be as well off upgrading the computers as selling them in their present condition, the company needs to cover the additional upgrade cost of £100,000 and achieve the same net gain as selling them for £50,000. The total cost of upgrading is £100,000, so the selling price per unit should be (£50,000 + £100,000) / 500 = £300.

The Tingey Company Has 500 Obsolete Microcomputers That Are Carried