Answer the Following Questions Using the Information Below

question 49

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.
-Management has offered to allow the prevention changes if all changes take place as anticipated and the amounts netted are less than the cost of the equipment.What is the net impact of all the changes created by the preventive changes?

• A)$(121 500)
• B)$69 000
• C)$(136 950)
• D)$(33 750)

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Definitions:

Adrenal Tumors

Abnormal growths that occur in the adrenal glands, which can be benign or malignant and may affect hormone production.

17-KS Test

A diagnostic test that measures the levels of 17-ketosteroids in the urine to assess adrenal gland function.

Adrenocortical Hormones

Hormones produced by the adrenal cortex that regulate various bodily functions, including metabolism and immune response.

Addison Disease

A disorder in which the adrenal glands don't produce sufficient steroid hormones.