A company must decide between scrapping or reworking units

Reference no: EM13608651

A company must decide between scrapping or reworking units that do not pass inspection. The company has 15,000 defective units that cost $5.3 per unit to manufacture. The units can be sold as is for $2.50 each, or they can be reworked for $3.50 each and then sold for the full price of $9.1 each. If the units are sold as is, the company will have to build 15,000 replacement units at a cost of $5.3 each, and sell them at the full price of $9.1 each.

(1)What is the incremental income from selling the units as scrap?

Incremental income $

(2)What is the incremental income from reworking and selling the units?

Incremental income $

Reference no: EM13608651

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