ACCT 356 Ch.20 HW Bryanna Zillmer

Relevant costs over the next year of changing to the new component= $70x 18,000 copiers= $1,260,000 Relevant Benefits over the Next Year of Choosing the New Component Costs of quality items Savings in rework costs$79 x 14,000 rework hours $ 1,106,000 Savings in customer-support costs$35 x 850 customer-support hours 29,750 Savings in transportation costs for parts$350 x 225 fewer loads 78,750 Savings in warranty repair costs$89 x 8,000 repair-hours 712,000 Total cost of savings$ 1,926,500 Opportunity costs Contribution margin from increased sales1,680,000 Cost savings and additional contribution margin$ 3,606,500 Because the expected relevant benefits of $ 3,606,500 exceed relevant costs of the new component of $1,260,000, SpeedPrint should introduce the new component. 2.The incremental cost of the new component of $1,260,000 is less than the incremental savings in rework and repair cost of $ 1,926,500 (1,106,000 + 29,750 + 78,750 + 712,000). Which means that it is beneficial for SpeedPrint to invest in the new component even without making any additional sales. 3.SpeedPrint should consider nonfinancial factors such as the reputation benefits of high quality that often cannot be quantified in terms of higher sales. Higher quality will also improve the morale of the employees at the company and their care and commitment to improving the processes. 24 1.Wait time= (average # of students per day) x (Timer taken to advise a student) ^2/2x(max amount of time available- [(average # of students per day) x (time taken to advise a student)] Wait time=12 minutes= 500x12^2 / 2[15x10x60 - (500x12)] 2.Wait time=24= 600x12^2 / 2x[15x10x60 -(600 x12)] 3.Wait time=10= 600x10^2 / 2x [15x10x60 -(600x10)]