Answer the Following Questions Using the Information Below

question 128

Multiple Choice

Answer the following questions using the information below:
Strykerz Corp expects to spend $800,000 in 2015 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 $60,000 in fixed appraisal costs and variable costs of $0.50 per unit of finished product. The new method involves $140,000 in training costs and an additional $150,000 in annual equipment rental.
Internal failure costs average $160 per failed unit of finished goods. During 2014, 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.
-What is the net effect on appraisal costs for 2015,assuming the new receiving method is implemented and that 800,000 material units are received?

• A) $120,000 increase
• B) $170,000 decrease
• C) $190,000 decrease
• D) $400,000 increase

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Definitions:

Supportive Therapy

A type of psychotherapy that aims to relieve distress by providing comfort, reassurance, and validation to the individual.

Depression

A common and serious mental health condition characterized by persistent feelings of sadness, loss, or anger that interfere with daily activities.

Lifestyle Analysis

A process of examining how an individual's habits, activities, and choices impact their health and life satisfaction.

Family Constellation

A therapeutic approach aimed at revealing and addressing hidden dynamics within a family or relationship to resolve issues.