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Cornerstone, Inc. has $131,000 of inventory that suffered minor smoke damage from a fire in...

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Accounting

Cornerstone, Inc. has $131,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $41,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $29,000. There the goods could be sold for $86,000. What alternative is more desirable and what is the relevant cost for that alternative?

Multiple Choice

  • Sell "as is," $131,000.

  • Clean and ship to outlet center, $29,000.

  • Clean and ship to outlet center, $115,000.

  • Clean and ship to outlet center, $160,000.

  • Neither alternative is desirable, as both produce a loss for the firm.

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