Hip Manufacturing produces denim clothing. This year it produced 3,060 denim jackets at a cost of $91,800. These jackets were damaged in the warehouse during storage. Management identified three alternatives for these jackets. Jackets can be sold as scrap to a secondhand clothing shop for $18,360. Jackets can be disassembled at a cost of $6,120 and sold to a recycler for $36,720. Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be

Hip Manufacturing produces denim clothing. This year it produced 3,060 denim jackets at a cost of $91,800. These jackets were damaged in the warehouse during storage. Management identified three alternatives for these jackets.

Jackets can be sold as scrap to a secondhand clothing shop for $18,360.

Jackets can be disassembled at a cost of $6,120 and sold to a recycler for $36,720.

Jackets can be reworked and turned into good jackets. The cost of reworking the jackets will be $104,040, and the jackets can then be sold for $137,700.

Required:

(1) Compute the income for each alternative.

(2) Which alternative should be chosen?