Response to the following problem:
Auto Components, Inc., has an inventory of 500 obsolete remote entry keys that are carried in inventory at a manufacturing cost of $80,000. Production Supervisor Terri Smith must decide whether to:
• Process the inventory further at a cost of $20,000, with the expectation of selling it for $28,000, or
• Scrap the inventory for a sale price of $6,000
What should Smith do? Present figures to support your decision.