Cysco Corp Has a Budget of $1,202,000 in 2017 for Prevention

question 139

Multiple Choice

Cysco Corp has a budget of $1,202,000 in 2017 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $100,000 in variable costs. The new method will require $50,000 in training costs and $149,000 in annual equipment costs. Management is willing to adjust the budget for an amount up to the cost of the new equipment. The budgeted production level is 205,000 units.
Appraisal costs for the year are budgeted at $505,000. The new prevention procedures will save appraisal costs of $50,600. Internal failure costs average $34 per failed unit of finished goods. The internal failure rate is expected to be 6% of all completed items. The proposed changes will cut the internal failure rate by one-half. Internal failure units are destroyed. External failure costs average $58 per failed unit. The company's average external failures average 2.7% of units sold. The new proposal will reduce this rate to 2%. Assume all units produced are sold and there are no ending inventories.
What is the net change in the budget of prevention costs if the procedures are automated in 2017? Will management agree with the changes?

• A) $100,000 decrease, yes
• B) $99,600 decrease, yes
• C) $100,000 increase, no
• D) $99,600 increase, yes

Differentiate between the formal roles and informal needs met by different organizational groups.

Identify how group norms and roles influence individual behavior and group dynamics.

Understand the concept of group cohesiveness and its impact on group performance.

Recognize the role conflict and role ambiguity in group settings and their implications.

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Definitions:

Binomial Distribution Formula

A mathematical expression that calculates the probability of obtaining a fixed number of successes in a fixed number of independent trials, given the success probability for one trial.

Permutations

The arrangement of all the members of a set into some sequence or order, or if the set is already ordered, rearranging its elements, a process called permuting.

Random Experiment

An experiment or process that leads to uncertain outcomes, each with definable probabilities.

Binomial Distribution

A probability distribution that summarizes the likelihood that a value will take one of two independent states across a series of experiments or trials.