Pratt Company has old inventory on hand that cost $15,000. Its scrap value is $20,000. The inventory could be sold for $50,000 if manufactured further at an additional cost of $15,000. What should Pratt do?
a) Sell the inventory for $20,000 scrap value
b) Manufacture further and sell it for $50,000
c) Hold the inventory at its $15,000 cost
d) Dispose of the inventory to avoid any further decline in value
Answer: b) Manufacture further and sell it for $50,000
Business
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