1.

2.

3.

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 $56,000 or reworked for $76,800 and then sold for $147,200. (a) Prepare a scrap or rework analysis of income effects. (b) Should the company sell the units as scrap or rework them? Chip Company produces three products, Kin, Ike, and Bix. Each product uses the same direct material. Kin uses 4.3 pounds of the material, Ike uses 3.1 pounds of the material, and Bix uses 6.1 pounds of the material. Selling price per unit and variable costs per unit of each product follow. (a) Compute contribution margin per pound of material for each product. (b) If demand is limited, list the three products in the order in which management should produce and meet demand. A manufacturer is considering eliminating a segment because it shows the following $6,300 loss. All $21,100 of its variable costs are avoidable, and $38,500 of its fixed costs are avoidable. (a) Compute the income increase or decrease from eliminating this segment. (b) Should the segment be eliminated? Compute the income increase or decrease from eliminating this segment. Complete this question by entering your answers in the tabs below. Should the segment be eliminated