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Hello! I am having issues with answering this problem. Any help will be much appreciated!
The management of City Front Inc. must decide between scrapping or reworking units that do not pass inspection. The company has 11,000 defective units that cost $6.00 per unit to manufacture. The units can be sold as is for $2.50 each or they can be reworked for $3.50 each and then sold for the full price of $9.70 each. If the units are sold as is, the company will also be able to build 11,000 replacement units at a cost of $6.00 each, and sell them at the full price of $9.70 each. What is the incremental income from reworking and selling the units?
$68,200
$40,700
$27,500
$106,700
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