Hip Manufacturing produces denim clothing. This year it produced 3,000 denim jackets at a cost of $90,000. These jackets were damaged in the warehouse during storage. Management identified three alternatives for these Jackets. 1. Jackets can be sold as scrap to a secondhand clothing shop for $18,000. 2. Jackets can be disassembled at a cost of $6,000 and sold to a recycler for $36,000. 3. Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be $102,000, and the jackets can then be sold for $135,000 Required: (1) Compute the income for each alternative. (2) Which alternative should be chosen? Scrap Recycle Rework Scrap, Recycle or Rework Analysis Revenue from scrap/recycle/rework Cost of recycled/reworked units Income Recycle Rework Scrap Hip Manufacturing produces denim clothing. This year it produced 3,000 denim jackets at a cost of $90,000. These jackets were damaged in the warehouse during storage. Management identified three alternatives for these Jackets. 1. Jackets can be sold as scrap to a secondhand clothing shop for $18,000. 2. Jackets can be disassembled at a cost of $6,000 and sold to a recycler for $36,000. 3. Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be $102,000, and the jackets can then be sold for $135,000 Required: (1) Compute the income for each alternative. (2) Which alternative should be chosen? Scrap Recycle Rework Scrap, Recycle or Rework Analysis Revenue from scrap/recycle/rework Cost of recycled/reworked units Income Recycle Rework Scrap