QS 10-10 (Algo) Scrap or rework LO P2 Rosa Company produced 1,300 defective phones due to a production error. The phones had cost $64,000 to produce. A salvage company will buy the defective phones as scrap for $48,100. It would cost Rosa $111,800 to rework the phones. If the phones are reworked, Rosa could sell them for $182,000. (a) Prepare a scrap or rework analysis of income effects. (b) Should Rosa scrap or rework the phones? (a) Scrap or Rework Analysis Scrap Rework Revenue from scrapped/reworked units Cost of reworked units Income (b) The company should: