Answer the Following Questions Using the Information Below

question 100

Multiple Choice

Answer the following questions using the information below:
LaCrosse Products has a budget of $900,000 in 2015 for prevention costs. If it decides to automate a portion of its prevention activities, it will save $80,000 in variable costs. The new method will require $40,000 in training costs and $100,000 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 150,000 units.
Appraisal costs for the year are budgeted at $600,000. The new prevention procedures will save appraisal costs of $50,000. 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 for prevention costs if the procedures are automated in 2015? Will management agree with the changes?

• A) $60,000 decrease, yes
• B) $60,000 increase, yes
• C) $140,000 increase, no
• D) $80,000 decrease, yes

Recognize the treatment of dividends and their impact on NCI.

Comprehend how profits and losses are distributed to NCI.

Identify the types of transactions that require NCI adjustments.

Understand the impact of intragroup services on NCI.

---

Definitions:

Cancers

A broad group of diseases involving abnormal cell growth with the potential to invade or spread to other parts of the body.

Fertility Treatments

Medical interventions designed to increase an individual's or couple's chances of conceiving, including techniques like IVF (In Vitro Fertilization).

Fallopian Tubes

The pair of tubes along which eggs travel from the ovaries to the uterus in female mammals; also where fertilization typically occurs.