and sell them as complete units. Which of the following is not relevant to the
decision?
11. Question : (TCO 7) BigByte Company has 12 obsolete computers that are carried
in inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500,
they could be sold for $15,300. Alternatively, the computers could be sold "as is" for
$9,000. What is the net advantage or disadvantage of reworking the computers?
12. Question : (TCO 7) Olde Store has 12,000 cans of crab meat just a week past the
expiration date. Each can cost $0.31. The cans could be sold as is for $0.20 each, or
relabeled and sold as gourmet cat food. The cost of relabeling the cans would be
$0.04 per can and the cans would then sell for $0.29 per can. What should be done
with the cans and why?
1. Question : (TCO 3) Describe a process costing system, including the types of
companies that commonly use this system. How can process costing information be
used in incremental analysis?
2. Question : (TCO 7) Each year, ACE Engines surveys 7,600 former and prospective
customers regarding satisfaction and brand awareness. For the current year, the
company is considering outsourcing the survey to RBG Associates, who have offered
to conduct the survey and summarize results for $50,000. Robert Ace, the president
of ACE Engines, believes that RBG will do a higher-quality job than his company has
been doing, but is unwilling to spend more than $12,000 above current costs. The
head of bookkeeping for ACE has prepared the following summary of costs related to
the survey in the prior year.
Prepare an incremental analysis in good form to determine the impact on profit of
going outside versus conducting the survey as in the past. Will ACE accept the RBG
offer? Why or why not?
3. Question : (TCO 4) The following monthly data are available for RedEx, which
produces only one product that it sells for $84 each. Its unit variable costs are $28
and its total fixed expenses are $64,960. Sales during April totaled 1,600 units.