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Need help figuring out the chart, the answers are the ones that I think are correct, not fore sure. Please and thank you. Exercise 25-21
Need help figuring out the chart, the answers are the ones that I think are correct, not fore sure. Please and thank you.
Exercise 25-21 Scrap or rework LO A1 A company must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $5.60 per unit to manufacture. The units can be sold as is for $3.40 each, or they can be reworked for $4.60 each and then sold for the full price of $9.00 each. If the units are sold as is, the company will be able to build 16,000 replacement units at a cost of $5.60 each, and sell them at the full price of $9.00 each. What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.) Sale as Scrap Rework Sales of reworked units $ 144,000 Sales of scrap units 54,400 Cost to rework units (73,600) Opportunity cost of not making new units Incremental income (loss) $ 54,400 $ 70,400 The company should: Sell as isStep by Step Solution
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