Answer the Following Questions Using the Information Below

question 111

Multiple Choice

Answer the following questions using the information below:
Barossa Manufacturing expects to spend $500 000 in 2018 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 $50 000 in fixed appraisal costs and variable costs of $0.50 per unit of finished product.The new method involves $70 000 in training costs and an additional $170 000 in annual equipment rental.It takes four units of material for each finished product.
Internal failure costs average $80 per failed unit of finished goods.During 2013,5% of all completed items had to be reworked.External failure costs average $200 per failed unit.The company's average external failures is 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.
-How much will internal failure costs change,assuming 800 000 units of materials are received and that the new receiving method reduces the amount of unacceptable product units in the manufacturing process by 10%?

• A)$25 000 decrease
• B)$170 000 decrease
• C)$80 000 decrease
• D)$20 000 increase

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Definitions:

Decision Process

A sequence of cognitive operations involved in making a choice between different alternatives.

Job Offer

A proposal by an employer to a prospective employee to begin employment in a specific position under agreed-upon terms.

Evolutionary Senses

The senses developed through the process of evolution to help organisms adapt to their environment and survive.

Action-Motivating

Capable of encouraging or prompting individuals to take action or make decisions.