Sasha Company produced 50 defective units last month at a unit manufacturing cost of $40.The defective units were discovered before leaving the plant.Sasha can sell them "as is" for $30 or can rework them at a cost of $25 and sell them at the regular price of $60.Which of the following is NOT relevant to the sell-or-rework decision?
A)$25 for rework
B)$30 selling price of defective units
C)$40 manufacturing cost
D)$60 regular selling price

Question

Quizplus · Accepted Answer

The $40 manufacturing cost is a sunk cost and not relevant to the decision of whether to sell the units as is or rework them. The decision should be based on the incremental costs and benefits of reworking versus selling as is.

Sasha Company Produced 50 Defective Units Last Month at a Unit