Pasha Company produced 50 defective units last month at a unit manufacturing cost of $30.The defective units were discovered before leaving the plant.Pasha can sell them "as is" for $20 or can rework them at a cost of $15 and sell them at the regular price of $50.Which of the following is not relevant to the sell-or-rework decision?
A)$15 for rework
B)$20 selling price of defective units
C)$30 manufacturing cost
D)$50 regular selling price
E)all of these are relevant

Question

Quizplus · Accepted Answer

The $30 manufacturing cost is a sunk cost and does not affect the decision to sell "as is" or rework the units.

Pasha Company Produced 50 Defective Units Last Month at a Unit