A company mistakenly produced 1,400 defective drones. The drones had cost $72,000 to produce. The defective...

Transcribed Image Text:

A company mistakenly produced 1,400 defective drones. The drones had cost $72,000 to produce. The defective drones can be sold as scrap for $39,500 or reworked at a cost of $114,000. If the drones are reworked, the company could sell them for $174,900. Compute the income to scrap and the income to rework. Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income Should the company scrap or rework the units? The company should: Scrap Rework A company mistakenly produced 1,400 defective drones. The drones had cost $72,000 to produce. The defective drones can be sold as scrap for $39,500 or reworked at a cost of $114,000. If the drones are reworked, the company could sell them for $174,900. Compute the income to scrap and the income to rework. Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income Should the company scrap or rework the units? The company should: Scrap Rework