A company must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $46,400 or reworked for $76,800 and then sold for $142400 (a) Prepare a scrap or rework analysis of income effects. (b) Should the company sell the units as scrap or rework them? Scrap Rework (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should Chip Company produces three products, Kin, ike, and Bix. Each product uses the same direct material. Kin uses 3.8 pounds of the material, Ike uses 4 pounds of the material, and Bix uses 5.5 pounds of the material. Selling price per unit and variable costs per unit of each product follow Kin Ike Bix Selling price per unit $ 155.04 $ 117.80 $ 205.50 Variable costs per unit 95.00 85.00 145.00 (a) Compute contribution margin per pound of material for each product. (b) If demand is limited, list the three products in the order in which management should produce and meet demand Product Contribution Margin Kin Ike Bix Contribution margin per pound Order in which management should produce and meet demand