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Ahngram Corp. has 1,000 defective units of a product that cost $3.60 per unit in direct costs and $7.10 per unit in indirect cost when

Ahngram Corp. has 1,000 defective units of a product that cost $3.60 per unit in direct costs and $7.10 per unit in indirect cost when produced last year. The units can be sold as scrap for $4.60 per unit or reworked at an additional cost of $3.10 and sold at full price of $13.80. The incremental net income (loss) from the choice of reworking the units would be:

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  • $4,600.
  • $0.
  • ($3,100).
  • $10,700.
  • $3,100.

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