Answer the Following Questions Using the Information Below

question 10

Multiple Choice

Answer the following questions using the information below:
Nurioopta Products has a budget of $900 000 in 2018 for prevention costs.If it decides to automate a portion of its prevention activities,it will save $65 000 in variable costs.The new method will require $24 000 in training costs and $110 000 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 170 000 units.
Appraisal costs for the year are budgeted at $600 000.The new prevention procedures will save appraisal costs of $30 000.Internal failure costs average $15 per failed unit of finished goods.The internal failure rate is expected to be 3% of all completed items.The proposed changes will cut the internal failure rate by one-third.Internal failure units are destroyed.External failure costs average $54 per failed unit.The company's average external failures average 3% of units sold.The new proposal will reduce this rate by 50%.Assume all units produced are sold and there are no ending inventories.
-What is the net change in the budget of prevention costs if the procedures are automated in 2018? Will management agree with the changes?

• A)$134 000 increase,no
• B)$69 000 increase,yes
• C)$65 000 increase,no
• D)$65 000 decrease,yes

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Definitions:

Visually

Relating to seeing or sight, often involving the ability to interpret and understand information presented in a visual form.

Dependent Variable

The dependent variable is the variable in an experiment that is being measured and is expected to change as a result of manipulations to the independent variable.

Memorizing Strategies

Techniques or methods used to aid in the absorption, retention, and recall of information.

Different Groups

Refers to various categorizations of individuals based on criteria such as characteristics, interests, beliefs, or demographics.