Chang Industries Has 2,000 Defective Units of Product That Have

question 103

Multiple Choice

Chang Industries has 2,000 defective units of product that have already cost $14 each to produce. A salvage company will purchase the defective units as they are for $5 each. Chang's production manager reports that the defects can be corrected for $6 per unit, enabling them to be sold at their regular market price of $21.
- The incremental income or loss on reworking the units is:

• A) $12,000 loss.
• B) $20,000 loss.
• C) $32,000 income.
• D) $20,000 income.
• E) $30,000 income.

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