Answer the Following Questions Using the Information Below

question 115

Multiple Choice

Answer the following questions using the information below:
Tri-State Manufacturing expects to spend $800,000 in 2012 in appraisal costs if it does not change its incoming materials inspection method. If it decides to implement a new receiving method, it will save $80,000 in fixed appraisal costs and variable costs of $0.40 per unit of finished product. The new method involves $120,000 in training costs and an additional $160,000 in annual equipment rental. It takes two units of material for each finished product.
Internal failure costs average $160 per failed unit of finished goods. During 2011, 5% of all completed items had to be reworked. External failure costs average $400 per failed unit. The company's average external failures are 1% of units sold. The company carries no ending inventories, because all jobs are on a per order basis and a just-in-time inventory ordering method is used.
-What is the net effect on appraisal costs for 2012, assuming the new receiving method is implemented and that 800,000 material units are received?

• A)$120,000 increase
• B)$120,000 decrease
• C)$400,000 decrease
• D)$400,000 increase

---

Definitions:

Discriminative Stimulus

A type of stimulus that signals the availability of reinforcement or punishment, guiding the organism's behavior towards or away from specific responses.

Operant Behavior

Operant behavior is a type of learning where behavior is controlled by behaviors leading to consequences like rewards or punishments.

Flash Of Light

usually describes a sudden and brief burst of light often perceived unexpectedly.

Government-subsidized

This term refers to financial support or assistance provided by the government to individuals, organizations, or industries to support economic activities, services, or policies deemed beneficial for society.