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23-05-2023
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Rosa Company produced 1,200 defective phones due to a production error. The phones had cost $63,000 to produce. A salvage company will buy the defective phones as scrap for $46,800. It would cost Rosa $98,400 to rework the phones. If the phones are reworked, Rosa could sell them for $163,200. (a) Prepare a scrap or rework analysis of income effects. (b) Should Rosa scrap or rework the phones? (a) Scrap or Rework Analysis Scrap Rework Revenue from scrapped/reworked units Cost of reworked units Income (b) The company should:

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