Rosa Company produced 1,475 defective phones due to a production error. The phones had cost $68,000 to produce. A salvage company will buy the defective phones as scrap for $56,050. It would cost Rosa $126,850 to rework the phones. If the phones are reworked, Rosa could sell them for $203,550. (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: