Asked by Katie Flynn on Jun 04, 2024
Verified
What is the net advantage or disadvantage to the company from upgrading the calculators?
A) $20,000 advantage.
B) $8,800 advantage.
C) $8,000 disadvantage.
D) $18,000 disadvantage.
Obsolete Desk Calculators
Desk calculators that are no longer in use or have been replaced by more modern or efficient technology.
Net Advantage
The overall benefit or gain obtained from a specific action or decision, considering all positive and negative implications.
- Comprehend and set apart sunk costs from opportunity costs in situations where decisions need to be made.
Verified Answer
AP
Argenis PerezJun 09, 2024
Final Answer :
B
Explanation :
If the calculators are upgraded, the total cost will be $26,800 + $10,000 = $36,800. The revenue from selling the upgraded calculators will be $30,000, which results in a net disadvantage of $6,800. On the other hand, if the calculators are sold in their current condition, the revenue will be $11,200, resulting in a net disadvantage of $15,600. Therefore, upgrading the calculators would be the best choice, as it results in a smaller net disadvantage of $6,800 compared to selling them in their current condition. The net advantage in upgrading is $30,000 - $36,800 = $8,800.
Learning Objectives
- Comprehend and set apart sunk costs from opportunity costs in situations where decisions need to be made.