FINANCIAL ACCOUNTING
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Transcribed Image Text:A company must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units
that have already cost $132,000 to manufacture. The units can be sold as scrap for $48,000 or reworked for $78,400 and then sold for
$144,000.
(a) Prepare a scrap or rework analysis of income effects.
(b) Should the company sell the units as scrap or rework them?
4) Sempor Red Analysis
Revenue from sorappedworked un
Cast of reworked units
Income
incrementalne
by The company should
Rework
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