Example 1 Sunglass House made 300 defective units (sunglasses) last month. Fortunately, the sunglasses were identified as being defective before they were sold to customers. They are currently included in Sunglass’ending inventory at $50 each. At the end of this year, the company will have to write off their $15,000 cost, since the units have no value in their present condition. The production manager has determined the sunglasses could be reworked for $5 and sold for $40 each. Sunglass has also received a bid from a liquidation company to purchase the defective units for $30 each.A.What alternatives are available to Sunglass House?
B.What information is irrelevant to the decision?
C.Which alternative would generate the best financial result?