At the end of October, Elizabeth lamented the company's situation: in the middle of production...
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At the end of October, Elizabeth lamented the company's situation: in the middle of production of Metlock-T's most popular longsleeve T-shirt, the company ran out of its usual collars, purchased from one main supplier. That supplier was also sold out. Metlock-T could get a slightly different premade collar, from a new supplier, at the same cost. So Elizabeth went ahead with the order, hoping it wouldn't delay production or affect the quality of the shirts. As it turned out, the new collars failed Metlock-T's quality control testing. Stuck with unwearable T-shirts, the company was also in a bind with its retail outlets, which wanted more shirts to sell! The costs to produce this most recent batch of shirts is as follows. In the decision of whether or not to rework the bad batch of T-shirts, how much of the T-shirt cost was sunk? (Round answer to 2 decimal places, e.8. 15.25.) Sunk cost /shirt If Metlock-T could have sold the botched shirts in as-is condition for $10.20 per shirt to a salvage store, would it have been better off than fixing them? Gross margin $ /unit Metlock-t would have been selling them as -is
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