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Firefox File Edit View History Bookmarks Tools Window Help X Ghec canwas Goagle SearchX 94% G) Sat 6:33 PM Atika Ishtiaq a E Oracle PeopleSoft Sign-in newconnect.mheducation.com. × Chegg Study | Guided Solution X https://newconnect.mheducation.com/flow/connect.html ...Searc Ch 10 Ex 10-6 6 Help Save & Exit Submit Saved Check my work Exercise 10-6 Scrap or rework LO A1 A company must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $6.00 per unit to manufacture. The units can be sold as is for $3.10 each, or they can be reworked for $4.60 each and thern sold for the full price of $9.10 each. If the units are sold as is, the company will be able to build 16,000 replacement units at a cost of $6.00 each, and sell them at the full price of $910 each. points eBook What is the incremental income from selling the units as scrap and reworking and selling the units? Should the company sell the units as scrap or rework them? (Enter costs and losses as negative values.) Hint Ask Print Sale as Scrap Rework Incremental income (loss) The company should Prev 1 of 1 Next Hill 988Explanation / Answer
CALCULATION OF THE REVENUE IF THE SCRAP SALE AS IS Sale As Scrap Rework Amount Revenue from the sale of Scrap (16,000 units X $ 3.10) $ 49,600.00 $ - Sales After the Rework (16,000 units X $ 9.10) $ - $ 1,45,600.00 Less: Addittional Cost for Genrate revenue from Scrap $ - $ 73,600.00 (16,000 X $ 4.60) Less : Opportunity Cost (16000 units X $ 3.10 ($ 9.10 - $ 6.00) = $ - $ 49,600.00 (Gain from Sale of build of Replacement Units) Net Gain $ 49,600 $ 22,400.00 Increamental Income $ 27,200 The company Should Sale As Scrap Net gain on Sale as scrap is more than rework on scrap , so it is better to sale as scrap
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