Premier Corp expects to spend $800,600 in 2020 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 materials units received. The new method involves $140,800 in training costs and an additional $150,900 in annual equipment rental Internal failure costs average $190 per failed unit of finished goods. During 2019, 5% of all completed items had to be reworked. External failure costs average $400 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 is the net effect on appraisal costs for 2020, assuming the new receiving method is implemented and that 800,700 material units are received? OA. $291,700 decrease OB. $4,003 increase O c. $2,400 increase OD. $168,650 decrease CDIS)
Premier Corp expects to spend $800,600 in 2020 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 materials units received. The new method involves $140,800 in training costs and an additional $150,900 in annual equipment rental Internal failure costs average $190 per failed unit of finished goods. During 2019, 5% of all completed items had to be reworked. External failure costs average $400 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 is the net effect on appraisal costs for 2020, assuming the new receiving method is implemented and that 800,700 material units are received? OA. $291,700 decrease OB. $4,003 increase O c. $2,400 increase OD. $168,650 decrease CDIS)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Subject :- Accounting
Transcribed Image Text:Premier Corp expects to spend $800,600 in 2020 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 materials units received. The new method involves $140,800 in training costs and an
additional $150,900 in annual equipment rental
Internal failure costs average $190 per failed unit of finished goods. During 2019, 5% of all completed items had to be
reworked. External failure costs average $400 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 is the net effect on appraisal costs for 2020, assuming the new receiving method is implemented and that
800,700 material units are received?
A. $291,700 decrease
B. $4,003 increase
OC. $2,400 increase.
OD. $168,650 decrease
BIODI
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