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Ahngram Corp. has 1,000 defective units of a product that cost $3.90 per unit in...

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Accounting

Ahngram Corp. has 1,000 defective units of a product that cost $3.90 per unit in direct costs and $7.40 per unit in indirect cost when produced last year. The units can be sold as scrap for $4.90 per unit or reworked at an additional cost of $3.40 and sold at full price of $14.70. The incremental net income (loss) from the choice of reworking the units would be:

Multiple Choice

  • $3,400.

  • $11,300.

  • $0.

  • $4,900.

  • ($3,400).

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