Answer:
The company should rework and sell defective products because profits are higher
Explanation:
We need to find the profit that will be generated when the defective goods are sold as scrap and when they are reworked.
Selling as scrap
Profit from scrap= Unit sales price * quantity
Profit from scrap= 3.10 * 13,000
Profit from scrap= $40,300
Reworking the defective products
Profit from rework= Sales revenue - cost of rework
Profit from rework= (9.1* 13,000) - (5* 13,000)
Profit from rework= 118,300 - 65,000
Profit from rework= $53,300
As profit from rework is higher we should rework and sell the defective products
