#2

Rosa Company produced 11,175 defective phones due to a production error. The phones had cost $67,000 to produce. A salvage company will buy the defective phones as 5crap for $35,250. It would cost Rosa $103,400 to rework the phones. If the phones are reworked, Rosa could sell them for $164,500 (o) Prepare a scrap or rework analysis of income effects. (b) Should Rosa scrap or rework the phones