#15

A company must decide between scrapping or reworking units that do not pass inspection. The company has 13,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $45,500 or reworked for $62,400 and then sold for $119,600. (a) Prepare a scrap or rework analysis of income effects. (b) Should the company sell the units as scrap or rework them