Holmes Company produces a product that can be either sold as is or processed further. Holmes has already spent $58,000 to produce 1,525 units that can be sold now for $75,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $255 per unit. If Holmes processes further, the units can be sold for $475 each. Should Holmes sell the product now or process it further? Sell as is Process Further 16 Incremental Amount Sales Additional processing costs Income (loss) The company should: ences Signal mistakenly produced 1,175 defective cell phones. The phones cost $68 each to produce. A salvage company will buy the defective phones as they are for $38 each. It would cost Signal $80 per phone to rework the phones. If the phones are reworked, Signal could sell them for $138 each. Signal has excess capacity. Should Signal scrap or rework the phones? Scrap Rework Sales Rework costs Income