A company must decide between scrapping or reworking units that do not pass inspection. The company has 44,000 defective units that have already cost $266,000 to manufacture. The units can be sold as scrap for $157,200 or reworked for $199,500 and then sold for $376,800. If the company decides to rework the units, incremental income equals:

Multiple Choice

• $20,100.

• $177,300.

• $(88,650).

• $36,600.

• $219,600.