Signal mistakenly produced 1,450 defective cell phones. The phones cost $62 each to produce. A...
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Signal mistakenly produced 1,450 defective cell phones. The phones cost $62 each to produce. A salvage company will buy the defective phones as they are for $39 each. It would cost Signal $82 per phone to rework the phones. If the phones are reworked, Signal could sell them for $146 each. Signal has excess capacity. Should Signal scrap or rework the phones? Scrap Rework Sales Rework costs Income Holmes Company produces a product that can be either sold as is or processed further. Holmes has already spent $50,000 to produce 1.700 units that can be sold now for $67,500 to another manufacturer. Alternatively, Holmes can process the units further at an incremental cost of $295 per unit. If Holmes processes further, the units can be sold for $435 each. Should Holmes sell the product now or process it further? Sell as is Process Further Incremental Amount Sales Additional processing costs Income (loss) The company should
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