Kelly Company has 20,000 units in inventory that had a production cost of $4 per unit. These units cannot be sold through normal channels due to a significant technology change. These units could be reworked at a total cost of $30,000 and sold for $35,000 . Another alternative is to sell the units to a junk dealer for $10,500 . The relevant cost for Kelly to consider in making its decision is
a. $80,000 of original product costs.
b. $30,000 for reworking the units.
c. $110,000 for reworking the units.
d. $35,000 for selling the units to the junk dealer.
B
Only the actual reworking costs are relevant. Original purchase costs are irrelevant.
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