Question

Calculator Company has 100,000 obsolete calculators, which are carried in inventory at a cost of $200,000. If the calculators are scrapped, they can be sold for $1.10 each. If they are repackaged, at a cost of $150,000, they could be sold to toy stores for $2.50 per unit. What price (from the toy stores) would make Calculator Company, indifferent between scrapping and repackaging? Select one: a. $ 2.50 b. $ 2.55 c. $ 4.00 d. $ 2.60

Answer 1

COST OF CALCULATOR=	200000/100000
COST OF CALCULATOR =	2
SCRAPPING CALCULATOR RECEIVED =	1.1
REPACKING COST =	150000/100000
REPACKING COST =	1.5
SALES PRICE AFTER REPACK	2.5
SALE PRICE AFTER REPACK PROFIT =	2.5-1.5
SALE PRICE AFTER REPACK PROFIT =	1
SCRAPPING CALCULATOR PROFIT	1.1
TO INDIFFERECE BETWEEN SCRAPPING AND REPACKING THE AMOUNT SHOULD BE = 2.5+1.1-1
AMOUNT =	2.6
SO OPTION D IS CORRECT THAT $ 2.60