Hello,

Can you please help me understand the step-by-step process to solve this problem?

Ames Manufacturing recently upgraded its production equipment at a cost of $500,000. During the testing phase of the new equipment, calibrations were set incorrectly, and 10,000 defective units were produced at a cost of $100,000 before the company discovered the issue. Recalibrating the equipment will cost $8,000. The defective products can be sold as scrap for $2 per unit. As an alternative, the defects can be corrected at a cost of $6 per unit, after which they can be sold for $14 per unit. 1. Costs irrelevant to this scrap or rebuild decision total $. 2. If the units are scrapped, incremental income will increase by $. 3. If the units are rebuilt, incremental income will increase by $.