Answer-
Particulars | Sell as Scrap | Rework |
$ | $ | |
Sale of scrap units | 16000 units*$3.10 per unit= $49600 | |
Sale of reworked units | 16000 units*$8.20 per unit= $131200 | |
Less- Cost of reworked units | 16000 units*$4.50 per unit= $72000 | |
Less- Opportunity cost of not making new units | 16000 units*($8.20 per unit-$5.10 per unit)= $49600 | |
Incremental income/(loss) | $49600 | $9600 |
The company should | sell as is |
A company must decide between scrapping or reworking units that do not pass inspection. The company...
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