The decision to rework a defective batch of products will improve net income whenever the incremental revenue earned as a result of the decision exceeds:
A) The variable costs of reworking the batch.
B) The incremental cost of reworking the batch.
C) The average cost per unit associated with reworking the batch.
D) The cash expenditure to rework the batch.

Question

Quizplus · Accepted Answer

The decision to rework a defective batch of products will improve net income whenever the incremental revenue earned exceeds the incremental cost of reworking the batch. Incremental costs are the additional costs incurred specifically due to the decision to rework the batch.

The Decision to Rework a Defective Batch of Products Will