Answer the Following Questions Using the Information Below

question 82

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.
-Nonfinancial measures of quality are of limited use by themselves. They are more informative when they are:

• A)combined with trend analysis
• B)used with the half-life depreciation method
• C)used with nonroutine financial data
• D)None of these answers is correct.

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Definitions:

Btu

British thermal unit, a unit of measure for energy; specifically, the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

Cold Material

A term that generally refers to material at a temperature significantly lower than the ambient or desired processing temperature.

Heat Exchanger

A device used to transfer heat between two or more fluids, gases, or solids of different temperatures without mixing them.

Condenser

An electrical charge storage device also known as a capacitor. In an A/C circuit, it is a heat exchanger located in the vehicle airflow and subject to the ram air. Cooling of the refrigerant causes it to condense to a liquid state. This results in the refrigerant changing to a liquid state.