A company must decide between scrapping or reworking units that do not pass inspection. The company has 19,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $49,400 or reworked for $89,300 and then sold for $161,500. (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 $ 161,500 $ (89,300) Cost of reworked units Income $ 49,400 210,900 $ 0 (89,300) Incremental income $ (b) The company should: Rework the units 121,600