QS $23-10($Algo$)$ Scrap or rework LO P$2$

Rosa Company produced $1,300$ defective phones due to a production error. The phones had cost $$68,000$ to

produce. A salvage company will buy the defective phones as scrap for $$41,600.$ It would cost Rosa $$104,000$ to

rework the phones. If the phones are reworked, Rosa could sell them for $$176,800.$

$($a$)$ Prepare a scrap or rework analysis of income effects.

$($b$)$ Should Rosa scrap or rework the phones?