We are asked to solve for the incremental net income from reworking the phones.
Number of items = 1000
Production Cost = 1000*$60 = $60,000
Salvage value = 1000*$30 = $30,000
Rework Cost = 1000 *80 = $80,000
Price when resold = 1000 * $120 = $120,000
Incremental Net = $120,000 + $30,000 - $60,000 -$80,000
Incremental Net = $10,000
The answer is $10,000.
