Martin Manufacturing inadvertently produced 6,000 defective portable radios. The radios cost $10 each to be manufactured. A salvage company will purchase the defective units as they are for $8 each. The production manager reports that the defects can be corrected for $4.50 per unit, enabling the company to sell them at the regular price of $15.00. The repair operations would not affect other production operations.

Required:

Determine whether the company should scrap (sell as is) the defective units or re-work (process further) them to sell

INCREMENTAL REVENUE AND COST OF ADDITIONAL PROCESSING
Revenue if processed further
Revenue if sold as is
Incremental revenue
Incremental net income(Loss)
The company should: