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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 $264,000
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 $264,000 to manufacture. The units can be sold as scrap for $156,000 or reworked for $198,000 and then sold for $374,000. If the company decides to rework the units, incremental income equals:
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$20,000.
$176,000.
$(88,000).
$36,000.
$218,000.
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