Exercise 23-4 Scrap or rework LO P2 A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 19,000 defective units that cost $5.50 per unit to manufacture. The units can be a) sold as is for $2.70 each, or b) reworked for $4.50 each and then sold for the full price of $8.20 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.) Sale as Scrap Rework Incremental income (loss) $ 0 $ 0 The company should: Exercise 23-6 Sales mix determination and analysis LO P3 Colt Company owns a machine that can produce two specialized products. Production time for Product TLX is two units per hour and for Product MTV is five units per hour. The machine's capacity is 2,000 hours per year. Both products are sold to a single customer who has agreed to buy all of the company's output up to a maximum of 3,400 units of Product TLX and 1,890 units of Product MTV. Selling prices and variable costs per unit to produce the products follow. $ per unit Selling price per unit Variable costs per unit Product TLX $13.00 3.90 Product MTV $7.80 4.68 Determine the company's most profitable sales mix and the contribution margin that results from that sales mix. (Round per unit contribution margins to 2 decimal places.) Product TLX Product MTV Contribution margin per unit Contribution margin per production hour Total Product TLX 3,400 Product MTV 1,890 Maximum number of units to be sold Hours required to produce maximum units Product TLX Product MTV Total For Most Profitable Sales Mix Hours dedicated to the production of each product Units produced for most profitable sales mix Contribution margin per unit Total contribution margin