Question: The Tesla Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $720,000. If these microcomputers are upgraded at a total cost of $100,000, they can be sold for a total of $160,000. As an alternative, the microcomputers can be sold in their present condition for $50,000(6 points).
a. Compute the sunk cost in this situation is.
b. What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?
c. Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition?