Bonita industries has old inventory on hand that cost $19500. its scrap value is $26000. the inventory could be sold for $65000 if manufactured further at an additional cost of $19500. what should bonita do? a) sell the inventory for $26000 scrap value b) dispose of the inventory to avoid any further decline in value c) hold the inventory at its $26000 cost d) manufacture further and sell it for $65000.

D) Manufacture further and sell it for $65,000.

Explanation:

If Bonita decides to sell its inventory as scrap it will earn $26,000, so its profit will be $6,500 (= $26,000 - $19,500).

If they decide to further manufacture the inventory then they will be able to sell it for $65,000, and it will make a $26,000 profit (= $65,000 - $19,500 - $19,500). This is the best choice.

(a) when insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal.

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