Ahngram Corp has 1000 defective units of a product that cost

Ahngram Corp. has 1,000 defective units of a product that cost $2.20 per unit in direct costs and $5.70 per unit in indirect cost when produced last yea The units can be sold as scrap for $3.20 per unit or reworked at an additional cost of $1.70 and sold at full price of $9.60. The incremental net income loss) from the choice of reworking the units would be: Multiple Choice $3,200 $7900 ($1700) $1700 so.

Solution

Answer =1 CALCULATION OF INCREAMENTAL INCOME SALE BEFORE REWORKED SALE AFTER REWORKED Revenue 3200 9600 (1000 units X $ 3.20) (1000 units X $ 9.60) Less: Cost Direct cost $2,200 $2,200 (1000 units X $ 2.20) (1000 units X $ 2.20) Indirect Cost $5,700 $5,700 (1000 units X $ 5.70) (1000 units X $ 5.70) Addittional Cost $0 $1,700 (1000 units X $ 1.70) Net Income -$4,700 $0 So, there is net income if the reworked Answer = Option 5 = $ 0