Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

Exercise 7

Road Master Shocks has 20,000 units of a defective product on hand that cost $123,500 to manufacture. The company can either sell this product as scrap for $4.18 per unit or it can sell the product for $10 per unit by reworking the units and correcting the defects at a cost of $119,200. What should the company do? Prepare a schedule in support of your recommendation.