Wenig Inc. has some material that originally cost $73,500. The material has a scrap value of $45,600 as is, but if reworked at a cost of $6,600, it could be sold for $58,100. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as is as scrap?
A)decrease of $22,000
B)decrease of $67,600
C)increase of $51,500
D)increase of $5,900

Question

Quizplus · Accepted Answer

The incremental effect is calculated by comparing the profit from reworking and selling the material versus selling it as scrap. Reworking cost is $6,600, and selling price after rework is $58,100, giving a net of $51,500. Selling as scrap gives $45,600. The incremental effect is $51,500 - $45,600 = $5,900 increase in profit.

Wenig Inc Has Some Material That Originally Cost $73,500