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 $142,400. (a) Prepare a scrap or rework analysis of income effects (6) Should the company sell the units as scrap or rework them? $ (2) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Scrap 46,400 $ (132,000) (85,600) $ Rework 76.800 (142,400) (65,600) $ Incremental income $ (85,600) (b) The company should 'Rework the units