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What is the incremental income from reworking units

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Problem - 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?

Reference no: EM133024880

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