A company must decide between scrapping or reworking units that do not pass inspection. The company has 13,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $39,000 or reworked for $62,400 and then sold for $111,800.

(a) Prepare a scrap or rework analysis of income effects.
(b) Should the company sell the units as scrap or rework them?

A company must decide between scrapping or reworking units that do not pass inspection. The company has 13.000 defecthe units that have aiready cost $132,000 to manufacture. The units can be sold as scrap for $39.000 or reworked for $62.400 and then sold for 5111,800 . (a) Prepare a scrap or rework analysis of income effects. (b) Should the compary soll the units as scrap or rework them