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 $59,800 and then sold for $113,100. (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: Gelb Company currently makes a key part for its main product. Making this part incurs per unit variable costs of $1.35 for direct materials and $0.90 for direct labor. Incremental overhead to make this part is $1.46 per unit. The company can buy the part for $3.89 per unit. (a) Prepare a make or buy analysis of costs for this part. (Enter your answers rounded to 2 decimal places.) (b) Should Gelb make or buy the part? Make Buy (a) Make or Buy Analysis Direct materials Direct labor Overhead Cost to buy Cost per unit Cost difference (b) Company should