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Chapter 1 Introduction to Managerial Accounting

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Question;185) Pete's Cola Company is investigating;the possibility of adopting a lean thinking philosophy throughout their;organization. Estimated costs to set up the computer system are $1,650,000;training employees in lean operations is estimated to cost $175,000, and the;general expenses of establishing the program are estimated at $315,000. The;estimated value of the potential savings is $1,975,000. Do the benefits;outweigh the costs or do the costs outweigh the benefits, and by how much?;A) Costs outweigh benefits by $150,000.;B) Benefits outweigh costs by $150,000.;C) Costs outweigh benefits by $165,000.;D) Benefits outweigh costs by $165,000.;186) Gilmore Corporation is investigating;the possibility of adopting a lean thinking philosophy in its manufacturing;facilities. The plant manager has done a cost-benefit analysis and has found;that the costs of the lean production program exceed the benefits by $115,000.;You analyze the situation and make some adjustments to the cost estimates.;After doing your analysis, you find that costs still outweigh benefits by less;than 5%. Which might be a sound course of action?;A) Consider dropping the plan.;B) Look for ways to lessen costs.;C) Re-evaluate the value of benefits.;D) All of the above should be considered.

 

Paper#54932 | Written in 18-Jul-2015

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