Bowl Me Over, Inc (BMO) makes ceramic bowls They have a capacity of 50,000 bowls per period. Below is the selling and cost information for BMO. Sales and cost information Sales Direct Materials Direct labor Variable overhead Fixed overhead Total product cost Variable selling expense (commission of 4% of sales dollars Fixed selling expense BMO sales and cost information Per Unit 30 3.50 10 5 7 25.50 1.20 .50 Dollars 1,200,000 140,000 400,000 200,000 280,000 1,020,000 48,000 20,000 BMO has a defective part rate of 12%. They can sell the defective bowls for $3.00 each. Alternatively, they can rework the bowls and sell them for full price. The cost to rework the bowls is $2 for direct materials, $5 for direct labor and 1.50 for variable overhead. Analyze the incremental income of both options and recommend a course of action for BMO. Scrapping Number of expected defective bowls Proceeds from selling defective bowls for scrap Incremental sales Rework Incremental Income from Scrapping Number of expected defective units Incremental direct materials Incremental direct labor Incremental Income from Reworking Incremental variable overhead units Incremental variable selling costs Total incremental costs Incremental income from reworking defective Dollars Dollars 46.560 Would you recommend scrap or rework? (enter your answer as scrap or rework)