Harold Manufacturing produces denim clothing. This year, it produced 5,190 denim jackets at a manufacturing cost of $42.00 each. These jackets were damaged in the warehouse during storage. Management investigated the matter and identified three alternatives for these jackets.

1. Jackets can be sold as is to a secondhand clothing shop for $8.00 each.
2. Jackets can be disassembled at a cost of $32,400 and sold to a recycler for $12.00 each.
3. Jackets can be reworked and turned into good jackets. However, with the damage, management estimates it will be able to assemble the good parts of the 5,190 jackets into only 2,930 jackets. The remaining pieces of fabric will be discarded. The cost of reworking the jackets will be $102,500, but the jackets can then be sold for their regular price of $44.00 each.

Required: 1. Calculate the incremental income.

Incremental revenue Incremental costs Incremental income Alternative 1 Alternative 2 Alternative 3 Sell to a Disassemble and Rework and sell at secondhand shop sell to a recycler regular prices $ 41,520 $ 57,090 $ 133,650 0 25,990 32,350 $ 41,520 31,100 $ 101,300 The company should choose: Alternative 1