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Author Question: Premier Corp expects to spend $800,900 in 2017 in appraisal costs if it does not change its incoming ... (Read 74 times)

nramada

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Premier Corp expects to spend $800,900 in 2017 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 $60,500 in fixed appraisal costs and variable costs of $0.50 per unit of finished product. The new method involves $140,500 in training costs and an additional $150,300 in annual equipment rental.

Internal failure costs average $250 per failed unit of finished goods. During 2016, 6% of all completed items had to be reworked. External failure costs average $450 per failed unit. The company's average external failures are 2% 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 600,300 units are used and assuming external failures are reduced by 12%.
◦ $48,054 increase
◦ $250,150 decrease
◦ $648,324 decrease
◦ $304,342 decrease


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Marked as best answer by nramada on Mar 6, 2021

mjenn52

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nramada

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Reply 2 on: Mar 6, 2021
Wow, this really help


billybob123

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Reply 3 on: Yesterday
Excellent

 

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