Varto Company has 9,000 units of its sole product in inventory that it produced last year at a cost of $22 each. This years model is superior to last years, and the 9,000 units cannot be sold at last years regular selling price of $41 each. Varto has two alternatives for these items: (1) they can be sold to a wholesaler for $13 each, or (2) they can be reworked at a cost of $204,200 and then sold for $35 each. Prepare an analysis to determine whether Varto should sell the products as is or rework them and then sell them.

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