A company must decide between scrapping or reworking units that do not pass inspection. The company has 13,000 defective units that have already cost $132,000 to manufacture. The units can be sold as scrap for $39,000 or reworked for $62,400 and then sold for $114,400. (a) Prepare a scrap or rework analysis of income effects. (b) Should the company sell the units as scrap or rework them? > Answer is complete but not entirely correct. (a) Scrap or Rework Analysis Scrap Rework S 35,100 $ Revenue from scrapped/reworked units Cost reworked units Income S 35,100 $ Incremental income S (b) The company should: Rework the units 110,500 X (63,700) 46,800 11,700 X