Problem: Central Medical Supply, Inc., a manufacturer of medical testing equipment, has $240,000 worth of an obsolete line of testing equipment. The obsolete equipment can be adapted to fit another line of testing equipment at a cost of $64,000; the market value would then be $136,000. However, Tripac offered to purchase the obsolete equipment as is for $88,000.
Which alternative should Central select?
a. scrap the inventory at no additional cost
b. rework the inventory at an additional loss of $304,000
c. rework the inventory and improve profits by$69,000
d. sell the inventory to Tripac