Cung Inc.has some material that originally cost $68,400.The material has a scrap value of $30,100 as is,but if reworked at a cost of $1,400,it could be sold for $30,800.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)-$69,100
B)-$700
C)$29,400
D)-$39,000

Question

Quizplus · Accepted Answer

The incremental effect on profit is calculated by comparing the profit from reworking and selling the material versus selling it as scrap. Reworking cost is $1,400, and selling price after reworking is $30,800. The profit from reworking is $30,800 - $1,400 = $29,400. The profit from selling as scrap is $30,100. The incremental effect is $29,400 - $30,100 = -$700.

Cung IncHas Some Material That Originally Cost $68,400