Answer the Following Questions Using the Information Below

question 2

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 would be the change in the external failure budget,if 600,000 units are used and assuming external failures are reduced by 10%.

• A) $40,000 increase
• B) $250,000 decrease
• C) $240,000 decrease
• D) $320,000 decrease

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Definitions:

Primates

An order of mammals including humans, monkeys, and apes, characterized by large brains, forward-facing eyes, and opposable thumbs.

Brain Size

The volume or weight of the brain, often discussed in relation to body size or intelligence across different species.

Radiator Hypothesis

The theory suggesting that the design of the human brain's vascular system evolved to help dissipate heat generated by increased metabolic activity.

Human Brain

The human brain is the central organ of the human nervous system, responsible for processing sensory information, regulating bodily functions, and enabling cognition, emotions, and memory.