Anagram Corp. has 1,000 defective units of a product that cost $3 per unit in direct costs

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Question:

Anagram Corp. has 1,000 defective units of a product that cost $3 per unit in direct costs and $6.50 per unit in indirect cost when produced last year. The units can be sold as scrap for $4 per unit or reworked at an additional cost of $2.50 and sold at full price of $12. The incremental net income (loss) from the choice of reworking the units would be:
a). $5,500.
b). $0.
c). ($2,500).
d). $10,500.
e). $2,500