A company decides to close down its plastics division.It has on hand 20 tons of styrene monomer,a raw material that has a market price of $700 per ton,which had been originally purchased at $650 per ton.Given that the company has no use for the styrene monomer,and that it would cost the company $5000 to store it,what is the value of the 20 tons of styrene monomer to the company?
A)-$5000
B)$0
C)$13,000
D)$14,000
E)$19,000

Question

Quizplus · Accepted Answer

The value of the styrene monomer to the company is based on the difference between the market price and the cost of storage.

The market value of the 20 tons of styrene monomer is 20 x $700 = $14,000.

The cost to store it is $5000.

Therefore, the value of the styrene monomer to the company is $14,000 - $5000 = $9,000.

Therefore, the correct answer is D) $14,000.

A Company Decides to Close Down Its Plastics Division