Cassie's Quilts alters,reconstructs,and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning,and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900.What should she do?
A)She should cut her losses and sell the quilt now.
B)It does not matter what she does; she is going to take a loss on her project.
C)She should purchase the period fabric,complete the task and then sell the quilt.
D)She should not do any more work on the quilt because she has already spent too much time on it and has not been paid for that time.

Question

Quizplus · Accepted Answer

Cassie has already spent $800 on purchasing, cleaning, and reconstructing the antique quilt. She expects to sell it for $1,500 once she completes it. If she sells it as it is now, she will only get $900. Therefore, she will incur a loss of $100 if she sells it now. However, if she purchases the period fabric costing $200 and completes the task, she can sell the quilt for $1,500, which gives her a profit of $500 ($1500 - $800 - $200). Hence, purchasing the fabric and completing the task is the best choice for Cassie.

Cassie's Quilts Alters,reconstructs,and Restores Heirloom Quilts