The Brisbane Manufacturing Company produces a single model of a CD player. Each player is sold for $197 with a resulting contribution margin of $77. Brisbane's management is considering a change in its quality control system. Currently, Brisbane spends $42,000 a year to inspect the CD players. An average of 2,000 units turn out to be defective: 1,400 of them are detected in the inspection process and are repaired for $80. If a defective CD player is not identified in the inspection process, the customer who receives it is given a full refund of the purchase price. The proposed quality control system involves the purchase of an x-ray machine for $210,000. The machine would last for five years and would have salvage value at that time of $20,000. Brisbane would also spend $440,000 immediately to train workers to better detect and repair defective units. Annual inspection costs would increase by $23,000. Brisbane expects this new control system to reduce the number of defective units to 350 per year. 290 of these defective units would be detected and repaired at a cost of only $43 per unit. Customers who still receive defective players will be given a refund equal to 120% of the purchase price. 1. What is the Year 2 cash flow if Brisbane keeps using its current system? $-272,200 You are correct. Your receipt no. is 156-8434 2 Previous Tries 2. What is the Year 2 cash flow if Brisbane replaces its current system? $-91,654 You are correct. Your receipt no. is 156-3441 0 Previous Tries 3. Assuming a discount rate of 6%, what is the net present value if Brisbane keeps using its current system? $-1,146,506 You are correct. Your receipt no. is 156-3952 Previous Tries 4. Assuming a discount rate of 6%, what is the net present value if Brisbane replaces its current system? -951748.92
The Brisbane Manufacturing Company produces a single model of a CD player. Each player is sold for $197 with a resulting contribution margin of $77. Brisbane's management is considering a change in its quality control system. Currently, Brisbane spends $42,000 a year to inspect the CD players. An average of 2,000 units turn out to be defective: 1,400 of them are detected in the inspection process and are repaired for $80. If a defective CD player is not identified in the inspection process, the customer who receives it is given a full refund of the purchase price. The proposed quality control system involves the purchase of an x-ray machine for $210,000. The machine would last for five years and would have salvage value at that time of $20,000. Brisbane would also spend $440,000 immediately to train workers to better detect and repair defective units. Annual inspection costs would increase by $23,000. Brisbane expects this new control system to reduce the number of defective units to 350 per year. 290 of these defective units would be detected and repaired at a cost of only $43 per unit. Customers who still receive defective players will be given a refund equal to 120% of the purchase price. 1. What is the Year 2 cash flow if Brisbane keeps using its current system? $-272,200 You are correct. Your receipt no. is 156-8434 2 Previous Tries 2. What is the Year 2 cash flow if Brisbane replaces its current system? $-91,654 You are correct. Your receipt no. is 156-3441 0 Previous Tries 3. Assuming a discount rate of 6%, what is the net present value if Brisbane keeps using its current system? $-1,146,506 You are correct. Your receipt no. is 156-3952 Previous Tries 4. Assuming a discount rate of 6%, what is the net present value if Brisbane replaces its current system? -951748.92
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter14: Quality And Environmental Cost Management
Section: Chapter Questions
Problem 35P: Recently, Ulrich Company received a report from an external consulting group on its quality costs....
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my secand tims asking this question ! it was answererd wrong the first time i asked! the answer is not -$951,748.92
![The Brisbane Manufacturing Company produces a single model of a CD player. Each player is sold for $197 with a resulting contribution margin of $77.
Brisbane's management is considering a change in its quality control system. Currently, Brisbane spends $42,000 a year to inspect the CD players. An average of 2,000 units turn out to be defective: 1,400 of
them are detected in the inspection process and are repaired for $80. If a defective CD player is not identified in the inspection process, the customer who receives it is given a full refund of the purchase price.
The proposed quality control system involves the purchase of an x-ray machine for $210,000. The machine would last for five years and would have salvage value at that time of $20,000. Brisbane would also
spend $440,000 immediately to train workers to better detect and repair defective units. Annual inspection costs would increase by $23,000. Brisbane expects this new control system to reduce the number of
defective units to 350 per year. 290 of these defective units would be detected and repaired at a cost of only $43 per unit. Customers who still receive defective players will be given a refund equal to 120% of
the purchase price.
1. What is the Year 2 cash flow if Brisbane keeps using its current system? $-272,200
You are correct.
Your receipt no. is 156-8434 O
Previous Tries
2. What is the Year 2 cash flow if Brisbane replaces its current system? $-91,654
You are correct.
Your receipt no. is 156-3441 O
Previous Tries
3. Assuming a discount rate of 6%, what is the net present value if Brisbane keeps using its current system? $-1,146,506
You are correct.
Your receipt no. is 156-3952 e
Previous Tries
4. Assuming a discount rate of 6%, what is the net present value if Brisbane replaces its current system?
|-951748.92](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff9cb0871-56f2-4aea-8b3e-0f878f091019%2F6bd4e4b3-726c-4a40-aed2-08daa6c69050%2Fxq45vv_processed.png&w=3840&q=75)
Transcribed Image Text:The Brisbane Manufacturing Company produces a single model of a CD player. Each player is sold for $197 with a resulting contribution margin of $77.
Brisbane's management is considering a change in its quality control system. Currently, Brisbane spends $42,000 a year to inspect the CD players. An average of 2,000 units turn out to be defective: 1,400 of
them are detected in the inspection process and are repaired for $80. If a defective CD player is not identified in the inspection process, the customer who receives it is given a full refund of the purchase price.
The proposed quality control system involves the purchase of an x-ray machine for $210,000. The machine would last for five years and would have salvage value at that time of $20,000. Brisbane would also
spend $440,000 immediately to train workers to better detect and repair defective units. Annual inspection costs would increase by $23,000. Brisbane expects this new control system to reduce the number of
defective units to 350 per year. 290 of these defective units would be detected and repaired at a cost of only $43 per unit. Customers who still receive defective players will be given a refund equal to 120% of
the purchase price.
1. What is the Year 2 cash flow if Brisbane keeps using its current system? $-272,200
You are correct.
Your receipt no. is 156-8434 O
Previous Tries
2. What is the Year 2 cash flow if Brisbane replaces its current system? $-91,654
You are correct.
Your receipt no. is 156-3441 O
Previous Tries
3. Assuming a discount rate of 6%, what is the net present value if Brisbane keeps using its current system? $-1,146,506
You are correct.
Your receipt no. is 156-3952 e
Previous Tries
4. Assuming a discount rate of 6%, what is the net present value if Brisbane replaces its current system?
|-951748.92
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