(Solved):Allegiance, Inc. has $136,000 of inventory that suffered minor smoke damage from a fire in the…

 

Question

Allegiance, Inc. has $136,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods “as is” for $42,000; alternatively, the goods can be cleaned and shipped to the firm’s outlet center at a cost of $24,000. There the goods could be sold for $91,000.

What alternative is more desirable and what is the relevant cost for that alternative?

a. Sell “as is,” $136,000.

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