(Solved):Chang Industries has 2,500 defective units of product that have already cost $14.50 each to…

 

Question

Chang Industries has 2,500 defective units of product that have already cost $14.50 each to produce. A salvage company will purchase the defective units as they are for $5.50 each. Chang’s production manager reports that the defects can be corrected for $5.50 per unit, enabling them to be sold at their regular market price of $22.00. The incremental income or loss on reworking the units is:

$27,500 loss
$27,500

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