A Job of 1,000 VCRs Manufactured by K Corp

Essay

A job of 1,000 VCRs manufactured by K Corp. contains defective parts. The cost incurred in manufacturing these defective units is $140,000. K Corp. can sell these units as scrap materials for $45 per unit or repair all 1,000 units at a total cost of $70,000. If the units are repaired, they can be sold at the normal price of $200 per unit.
-Should K Corp. (1) sell the units for scrap or (2) repair the units? Underline the most profitable action, and indicate the amount of the net financial benefit of this action to the company. $____________