Use the Information Below to Answer the Following Question(s)

question 77

Multiple Choice

Use the information below to answer the following question(s) .Dylan Products has a budget of $1,200,000 in 2018 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.
-How much will appraisal costs change assuming that the new prevention methods reduce material failures by 30% in the appraisal phase?

• A)$150,000 decrease
• B)$229,000 decrease
• C)$50,000 increase
• D)$50,000 decrease
• E)$84,000 decrease

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Definitions:

Shared Problem Group

A concept referring to a collection of individuals who come together to address a common issue or challenge.

Existential Therapy

A form of psychotherapy that focuses on individual freedom, choice, and responsibility, aimed at helping clients find meaning and purpose in life.

Professional

Pertaining to or connected with a profession, or exhibiting a courteous, conscientious, and generally businesslike manner in the workplace.

Cognitive Therapy

A form of psychotherapy that emphasizes the importance of thought patterns in affecting behavior and emotions.