When making scrap or rework decisions, management should consider: (Check all that apply.)Multiple select question.revenue from selling defective units as scrap.costs already incurred in producing defective units.existing sales.incremental costs.
Question
When making scrap or rework decisions, management should consider: (Check all that apply.)Multiple select question.revenue from selling defective units as scrap.costs already incurred in producing defective units.existing sales.incremental costs.
Solution
When making decisions about scrap or rework, management should consider:
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Revenue from selling defective units as scrap: This is the potential income that can be generated from selling the defective units as scrap. If the revenue is high, it might be more beneficial to sell the units as scrap rather than reworking them.
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Costs already incurred in producing defective units: These are the sunk costs that have already been spent in the production of the defective units. These costs cannot be recovered, but they should be considered when deciding whether to rework the units or sell them as scrap.
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Incremental costs: These are the additional costs that would be incurred in reworking the defective units. If these costs are high, it might be more cost-effective to sell the units as scrap.
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Existing sales: This refers to the current demand for the product. If there is a high demand, it might be more beneficial to rework the defective units to meet this demand, rather than selling them as scrap.
So, all of the above options should be considered by management when making scrap or rework decisions.
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