$10-33$ Quality improvement, relevant costs, relevant revenues. SpeedPrint manufactures and

sells $18,000$ high$-$technology printing presses each year. The variable and fixed costs of rework and repair

are as follows:

Variable Cost Fixed Cost Total Cost

Rework cost per hour $ $79$ $ $115$ $ $194$

Repair costs

Customer support cost per hour $355590$

Transportation cost per load $350115465$

Warranty repair cost per hour $89150239$

SpeedPrint$$s current presses have a quality problem that causes variations in the shade of some colours.

Its engineers suggest changing a key component in each press. The new component will cost $$70$ more

than the old one. In the next year, however, SpeedPrint expects that with the new component it will

$(1)$ save $14,000$ hours of rework, $(2)$ save $850$ hours of customer support, $(3)$ move $225$ fewer loads, $(4)$ save

$8,000$ hours of warranty repairs, and $(5)$ sell an additional $140$ printing presses, for a total contribution

margin of $$1,680,000.$ SpeedPrint believes that even as it improves quality, it will not be able to save any of

the fixed costs of rework or repair. SpeedPrint uses a $1-$year time horizon for this decision because it

plans to introduce a new press at the end of the year.

Required

$1.$ Should SpeedPrint change to the new component? Show your calculations