Jasper Joints Has 1,000 Obsolete Joints on Hand

Multiple Choice

Jasper Joints has 1,000 obsolete joints on hand. These units were produced a year ago at a cost of $10,000. The units could be scrapped for $1,000 or reworked for $2,000 and sold for $5,000. Which alternative is desirable and why?

A) Scrap, profit of $1,000 is higher than the other option
B) Rework, incremental loss $7,000
C) Rework, profit of $3,000 is higher than the other option
D) Scrap, incremental loss $9,000