Rosa Company produced 1,450 defective phones due to a production error. The phones had cost $70,000 to produce. A salvage company will buy the defective phones as scrap for $55,100. It would cost Rosa $121,800 to rework the phones. If the phones are reworked, Rosa could sell them for $191,400. (a) Prepare a scrap or rework analysis of income effects. (b) Should Rosa scrap or rework the phones? (a) Scrap or Rework Analysis Revenue from scrapped/reworked units Cost of reworked units Income (b) The company should: Scrap Rework

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