A company must decide between scrapping or reworking units that do not pass inspection. The company has 10,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $31,000 or reworked for $49,000 and then sold for $92,000. (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 $ 28,000 $ 82,000 Cost of reworked units 46,000 Income $ 28,000 $ 36,000 Incremental income $ 8,000 (b) The company should Rework the units