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Answer the Following Questions Using the Information Below

question 25

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.
-In the formula to calculate the average waiting time, the manufacturing time is squared because:

Definitions:

Mesozoic Layers

Stratified layers of rock that were formed during the Mesozoic Era, which spans from about 252 to 66 million years ago, encompassing the Triassic, Jurassic, and Cretaceous periods.

Dinosaur Fossils

Remains or traces of dinosaurs preserved in rock.

First Reptiles

Earliest forms of reptiles, marking the origin and evolution of reptilian species on Earth.

Jawed Fishes

Vertebrates possessing a jawbone, including most modern fish species, enabling varied diets and ecological niches.