Reference no: EM132524246

Question 1: Gordon Corporation inadvertently produced 10,000 defective digital watches. The watches cost $8 each to produce. A salvage company will purchase the defective units as they are for $3 each. Gordon's production manager reports that the defects can be corrected for $5 per unit, enabling them to be sold at their regular market price of $12.50. Gordon should:

Multiple Choice

Option 1: Sell the watches for $3 per unit.

Option 2: Correct the defects and sell the watches at the regular price.

Option 3: Sell the watches as they are because repairing them will cause their total cost to exceed their selling price.

Option 4: Sell 5,000 watches to the salvage company and repair the remainder.

Option 5: Throw the watches away.