Drawstring Manufacturing has 800 obsolete personal computers that are carried in inventory at a total cost of $1,100,000. If these computers are upgraded at a total cost of $40,000, they can be sold for a total of $750,000. As an alternative, the computers can be sold in their present condition for $690,000. What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition? Select one: a. $20,000 advantage b. $20,000 disadvantage c. $60,000 advantage d. $60,000 disadvantage Solution Solution- a. $20,000 advantage Calculation- Sales value of upgraded computers $750,000 Less sales value as is $690,000 Incremental revenue from upgrading $60,000 Less cost of upgrading $40,000 Profit (loss) from further up-gradation $20,000 .

1. Drawstring Manufacturing has 800 obsolete personal computers that are carried in inventory at a
total cost of $1,100,000. If these computers are upgraded at a total cost of $40,000, they can be
sold for a total of $750,000. As an alternative, the computers can be sold in their present
condition for $690,000.
What is the net advantage or disadvantage to the company from upgrading the computers rather
than selling them in their present condition?
Select one:
a. $20,000 advantage
b. $20,000 disadvantage
c. $60,000 advantage
d. $60,000 disadvantage
Solution
Solution-
a. $20,000 advantage
Calculation-
Sales value of upgraded computers
$750,000
Less sales value as is
$690,000
Incremental revenue from upgrading

2. $60,000
Less cost of upgrading
$40,000
Profit (loss) from further up-gradation
$20,000
Sales value of upgraded computers $750,000
Less sales value as is $690,000
Incremental revenue from upgrading $60,000
Less cost of upgrading $40,000
Profit (loss) from further up-gradation $20,000