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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

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 $87,400 and then sold for $155,800. (a) Prepare a scrap or rework analysis of income effects. (b) Should the company sell the units as scrap or rework them?

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