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 $41,600 or reworked for $65,000 and then sold for $118,300. (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 $ 32,500 Cost of reworked units + Income Incremental income (b) The company should: $ 32,500 $ 0