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garcia company has 10,000 units of its product that were produced at a cost of $150,000. the units were damaged in a rainstorm. garcia can sell the units as scrap for $20,000, or it can rework the units at a cost of $38,000 and then sell them for $50,000. (a) prepare a scrap or rework analysis of income effects. (b) should garcia sell the units as scrap or rework them and then sell them?

Respuesta :

ashishdwivedilVT

When a physical item is declared to be no longer for use , its other components are valued at their Discard value.

What is Rework  Value ?

A long-term asset, such as a piece of furniture, a vehicle, or machinery, may be  of once it has served its purpose. The terms ,  Discard  value, and break value are frequently used.

discard  value,  ,   are other terms for the same thing. The estimated resale value of an asset is its scrap value when it has reached the end of its useful life.

The computation of the incremental net income is shown below:

Particulars    Sell                             Process Further      

Sales        $20,000.00                       $50,000.00      

             (10,000 units × $2)                   (10,000 × $5)

Less:

Additional

Processing cost                                          $38,000.00

Total        $20,000.00                                  $12,000.00          

Hence she should sell them as a Scrap

Learn more Rework Value here

https://brainly.com/question/20847642

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