Ahngram Corp. has 1,000 defective units of a product that cost $2.50 per unit in direct costs and $6.00 per unit in indirect cost when produced last year. The units can be sold as scrap for $3.50 per unit or reworked at an additional cost of $2.00 and sold at full price of $10.50. The incremental net income (loss) from the choice of reworking the units would be:

Multiple Choice $3,500. $0. ($2,000). $8,500. $2,000.

Minor Electric has received a special one-time order for 1,200 light fixtures (units) at $14 per unit. Minor currently produces and sells 6,000 units at $15.00 each. This level represents 75% of its capacity. Production costs for these units are $18.00 per unit, which includes $12.00 variable cost and $6.00 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $700 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. If Minor wishes to earn $1,300 on the special order, the size of the order would need to be:

Multiple Choice

1,000 units.

2,000 units.

900 units.

4,000 units.

86 units.