Answer:
Incremental net income = $42,080
Explanation:
<em>Note the the income would be that which result from the alternative action with the highest net income Note that the manufacturing cost of $12 per unit is not relevant for the purpose of this decision and hence would not form part of the analysis</em>
$
Option one: Outright sale
Sales from disposal = 5,260× 8 42,080
Option 2: disassembling
Revenue $12 × 5,260 = 63120
Cost of disassembling <u>( 31,800) </u>
Net income <u> 31,320
</u>
Option 3: Reworking
Sales revenue ($45.00× 3,050) 137250
Cost of reworking <u> (102,200)</u>
Net income <u> 35,050
</u>
The outright option gives the highest net income hence should be considered.
Incremental net income = $42,080
