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Exercise 2 3 - 4 ( Algo ) Scrap or rework LO P 2 A company must decide between scrapping or reworking units that do

Exercise 23-4(Algo) Scrap or rework LO P2
A company must decide between scrapping or reworking units that do not pass inspection. The company has 10,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $27,000 or reworked for $45,000 and then sold for $83,000.
(a) Prepare a scrap or rework analysis of income effects.
(b) Should the company sell the units as scrap or rework them?

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