11-21Disposal of assets. Answer the following questions.1.A company has an inventory of 1,300 assorted parts for a line of missiles that has beendiscontinued. The inventory cost is $71,000. The parts can be either (a) remachined at totaladditional costs of $27,500 and then sold for $31,500 or (b) sold as scrap for $6,000. Whichaction is more profitable? Show your calculations.2.A truck, costing $102,500 and uninsured, is wrecked its first day in use. It can be either (a)disposed of for $14,000 cash and replaced with a similar truck costing $105,500 or (b) rebuiltfor $86,000 and thus be brand-new as far as operating characteristics and looks areconcerned. Which action is less costly? Show your calculations.SOLUTIONDisposal of assets.
Acc3210 – Cost AccountingChapter 11 – Lecture Problems Set 1Last Revised: October 31, 20194