The Tolar Corporation 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.What is the financial advantage (disadvantage) to the company from upgrading the calculators?
A) $8,800
B) ($18,000)
C) $20,000
D) ($8,000)

Question

Quizplus · Accepted Answer

To find the financial advantage or disadvantage of upgrading the calculators, we need to compare the cost and revenue of both alternatives.

Option 1: Upgrade the calculators

Total cost of upgrading = $10,000
Total revenue from selling upgraded calculators = $30,000
Net gain = Revenue - Cost = $30,000 - $10,000 = $20,000

Option 2: Sell the calculators in their present condition

Total revenue from selling as is = $11,200

Comparing the net gain in both scenarios, we see that upgrading the calculators results in a higher financial advantage of $20,000 - $11,200 = $8,800. Therefore, the best choice is to upgrade the calculators.

The Tolar Corporation Has 400 Obsolete Desk Calculators That Are