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 16,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $56,000 or reworked for $75,200 and then sold for $139,200. (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