Aerotechs market for its drone controls has changed significantly, and Aerotech has had to drop...
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Aerotechs market for its drone controls has changed significantly, and Aerotech has had to drop the selling price per unit from $45 to $38. There are some units in the work in process inventory that have costs of $30 per unit associated with them. Aerotech can sell these units in their current state for $22 each. It will cost Aerotech $11 per unit to rework these units so that they can be sold for $38 each. A new employee looks at the analysis and exclaims, Well lose money with either of these alternatives! Lets just throw these units in the trash! What effect will this option have on net income?
A) Profit will decrease by $30 per unit for each unit discarded.
B) Profit will decrease by $45 per unit for each unit discarded.
C) Profit will increase by $11 per unit since the completion costs will not have to be incurred.
D) Profit will decrease by $5 per unit for each unit discarded
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