Hip Manufacturing produces denim clothing. This year it produced 3,040 denim jackets at a cost of $91,200. 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 $18,240. 2. Jackets can be disassembled at a cost of $6,080 and sold to a recycler for $36,480. 3. Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be $103,360, and the jackets can then be sold for $136,800. Required: (1) Compute the income for each alternative. (2) Which alternative should be chosen? Scrap, Recycle or Rework Analysis Scrap Recycle Rework Revenue from scrap/recycle/rework $ 19,440 $ 38,880 $ 145,800 Cost of recycled/reworked units 6,480 110,160 Income $ 19,440 $ 32,400 $ 35,640 The company should choose: Rework