Road Master Shocks has 15,000 units of a defective product on hand that cost $80,000 to manufacture. The company can either sell this product as scrap for $6 per unit or it can sell the product for $9 per unit by reworking the units and correcting the defects at a cost of $40,000.   Prepare a schedule to show the effect of selling the defective units as scrap or rework.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Road Master Shocks has 15,000 units of a defective product on hand that cost $80,000 to manufacture. The company can either sell this product as scrap for $6 per unit or it can sell the product for $9 per unit by reworking the units and correcting the defects at a cost of $40,000.

 

Prepare a schedule to show the effect of selling the defective units as scrap or rework.

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