A company must decide between scrapping or reworking units that do not pass Inspection. The company...

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A company must decide between scrapping or reworking units that do not pass Inspection. The company has 16,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $54,400 or reworked for $76,800 and then sold for $139,200. (a) Prepare a scrap or rework analysis of Income effects. (b) Should the company sell the units as scrap or rework them? (a) Scrap or Rework Analysis Scrap Rework Revenue from scrapped/reworked units S 54,400 $ 139,200 Cost of reworked units 76,800 Income S 54,400 $ 62,400 Incremental income S 8,000 (b) The company should: Rework the units A company must decide between scrapping or reworking units that do not pass Inspection. The company has 16,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $54,400 or reworked for $76,800 and then sold for $139,200. (a) Prepare a scrap or rework analysis of Income effects. (b) Should the company sell the units as scrap or rework them? (a) Scrap or Rework Analysis Scrap Rework Revenue from scrapped/reworked units S 54,400 $ 139,200 Cost of reworked units 76,800 Income S 54,400 $ 62,400 Incremental income S 8,000 (b) The company should: Rework the units