(Solved):1. Chang Industries has 2,800 defective units of product that have already cost $14.80 each to…

 

Question

1. Chang Industries has 2,800 defective units of product that have already cost $14.80 each to produce. A salvage company will purchase the defective units as they are for $5.80 each. Chang’s production manager reports that the defects can be corrected for $5.20 per unit, enabling them to be sold at their regular market price of $22.60. The Incremental Income or loss on reworking the units is:

A. $32,480 loss.

B. $32,480

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