$2$

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 $$59,800$ and then sold for $$118,300.$

$($a$)$ Prepare a scrap or rework analysis of income effects.

$5\mathrm{.}25$

$($b$)$ Should the company sell the units as scrap or rework them?

points

$02$:$56$:$59$

$\backslash$table$[[($a$)$ Scrap or Rework Analysis,Scrap,Rework$],[$Revenue from scrapped$/$reworked units,,$],[$Cost of reworked units,,$],[$Income$,,],[,,],[$Incremental income,,$],[,,],[($b$)$ The company should:,,$]]$