1. The income for each alternative for the damaged jackets of Hip Manufacturing is as follows:
Scrap Recycle Rework
Sales Revenue $18,240 $36,480 $136,800
Additional cost 0 6,080 103,360
Income $18,240 $30,400 $33,440
2. The chosen alternative is C. reworking.
<h3>Data and Calculations:</h3>
Production units = 3,040
Production costs = $91,200
Scrap Recycle Rework
Sales Revenue $18,240 $36,480 $136,800
Additional cost 0 6,080 103,360
Income $18,240 $30,400 $33,440
Thus, reworking yields the highest income and should be chosen as it reduces the loss from the damage more than scrapping or recycling.
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