Assuming that the MR Corporation has an inventory of 200 defective motors costing $450,000 to produce and $150,000 to repair,the repaired units can be sold for $275,000.The company receives an offer to purchase these motors for $100,000 before repairing them.The company's decision should be to sell the motors at the offered price.

Question

Quizplus · Accepted Answer

Selling the motors for $100,000 would result in a loss of $500,000 ($450,000 + $150,000 - $275,000) for the MR Corporation. Therefore, it is not beneficial for the company to sell the motors at the offered price and their decision should be to not sell the motors.

Assuming That the MR Corporation Has an Inventory of 200