Question
Garcia Company has 11,100 units of its product that were produced at a cost of $166,500. The units were damaged in a rainstorm. Garcia
Garcia Company has 11,100 units of its product that were produced at a cost of $166,500. The units were damaged in a rainstorm. Garcia can sell the units as scrap for $22,200, or it can rework the units at a cost of $41,300 and then sell them for $54,300. (a) Prepare a scrap or rework analysis of income effects. (b) Should Garcia sell the units as scrap or rework them and then sell them? (a) Scrap or Rework Analysis Scrap Rework Revenue from scrapped/reworked units $ 22,200 Cost of reworked units Income $ 22,200 Incremental income (b) The company should:
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