QS 23-9 (Algo) Scrap or rework LO P2 Garcia Company has 10,600 units of its product that were produced at a cost of $159,000. The units were damaged in a rainstorm Garcia can sell the units as scrap for $31,800, or it can rework the units at a cost of $50,400 and then sell them for $66,300 (a) Prepare a scrap or rework analysis of income effects (b) Should Garcia sell the units as scrap or rework them and then sell them? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should $ Scrap 0$ Rework 0
QS 23-9 (Algo) Scrap or rework LO P2 Garcia Company has 10,600 units of its product that were produced at a cost of $159,000. The units were damaged in a rainstorm Garcia can sell the units as scrap for $31,800, or it can rework the units at a cost of $50,400 and then sell them for $66,300 (a) Prepare a scrap or rework analysis of income effects (b) Should Garcia sell the units as scrap or rework them and then sell them? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income Incremental income (b) The company should $ Scrap 0$ Rework 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:QS 23-9 (Algo) Scrap or rework LO P2
Garcia Company has 10,600 units of its product that were produced at a cost of $159,000. The units were damaged in a rainstorm
Garcia can sell the units as scrap for $31,800, or it can rework the units at a cost of $50,400 and then sell them for $66,300
(a) Prepare a scrap or rework analysis of income effects
(b) Should Garcia sell the units as scrap or rework them and then sell them?
(a) Scrap or Rework Analysis
Revenue from scrapped/reworked units
Cost of reworked units
Income
Incremental income
(b) The company should.
$
Scrap
0 $
Rework
0
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