Allegiance, Inc

Multiple Choice

Allegiance, Inc. has $125,000 of inventory that suffered minor smoke damage from a fire in the warehouse. The company can sell the goods "as is" for $45,000; alternatively, the goods can be cleaned and shipped to the firm's outlet center at a cost of $23,000. There the goods could be sold for $80,000. What alternative is more desirable and what is the relevant cost for that alternative?

A) Sell "as is," $125,000.
B) Clean and ship to outlet center, $23,000.
C) Clean and ship to outlet center, $103,000.
D) Clean and ship to outlet center, $148,000.
E) Neither alternative is desirable, as both produce a loss for the firm.