Answer the Following Questions Using the Information Below

question 16

Multiple Choice

Answer the following questions using the information below:
Dylan Products has a budget of $1,200,000 in 2011 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $90,000 in variable costs. The new method will require $40,000 in training costs and $150,000 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 210,000 units.
Appraisal costs for the year are budgeted at $500,000. The new prevention procedures will save appraisal costs of $50,000. Internal failure costs average $20 per failed unit of finished goods. The internal failure rate is expected to be 4% 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 $48 per failed unit. The company's average external failures average 2.5% of units sold. The new proposal will reduce this rate to 1%. Assume all units produced are sold and there are no ending inventories.
-Management has offered to allow the prevention changes if all changes take place as anticipated and the amounts netted are less than the cost of the equipment. What is the net impact of all the changes created by the preventive changes?

• A)$185,200
• B)$(185,200)
• C)$(134,200)
• D)$(279,200)

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Definitions:

Caregivers

Individuals who provide care and support to others, such as children, the elderly, or those with disabilities, often encompassing both paid professionals and unpaid family members.

Responsive

Being quick to react positively or appropriately to stimuli or information, often used in the context of communication, web design, or customer service.

Basic Needs

Fundamental requirements for human survival and well-being, which typically include food, water, shelter, and safety.

Trust Versus Mistrust

The first stage in Erik Erikson's theory of psychosocial development, where an infant learns to trust or mistrust their caregivers and the world based on the care they receive.