Answer the Following Questions Using the Information Below

question 53

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.
-An important difference between financial measures of quality and nonfinancial measures of quality is that:

• A)financial measures of quality tend to be useful indicators of future long-term performance, while nonfinancial measures have more of a short-term focus
• B)nonfinancial measures of quality tend to be useful indicators of future long-term performance, while financial measures of quality have more of a short-term focus
• C)nonfinancial measures are generally too subjective to have any long-term value
• D)None of these answers is correct.

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Definitions:

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A cutoff point set at 11:59 PM, often used in legal, financial, and operational contexts to mark the end of a given day or deadline.

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A business day during which financial institutions are open for conducting banking transactions.

Bank Statement

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