The engineer estimates that QWas will change the daily costs because it is less dangerous. However, it does not work quite well so the rework rate is higher. Flesengate works 300 days per year. 15% increase in rework 30% decrease in materials handling 30% decrease in inspection 50% decrease in warehousing The marketing people are not sure what the impact of the new label would be on sales. You need to help them assess whether think it is worth it to use QWAS instead of changing the label 

Required: 

A. Prepare a schedule comparing the costs of the three alternatives: current, new label; new chemical. 

B. If they only the financial analysis and chose to use the new chemical, what is the minimum value they are assigning to the impact on by customer of having the new label? 

Cost Comparisons. A financial manager at FlexinCiate out that a chemical used in the product (called CF12) has been assessed by the State of California to cause cancer, no, labels on products sold in California need to include the following "This product contains chemicals known by the state of California to cause cancer". 

This will cost about $90,000 Since they cannot control where products end up, all products will need the new labels. concerned about the increased si The new labels take more space on the product, so the Marketing people are impacting on customers of having the word "cancer" on the product. An engineer found a chemical (QW45) that would stead of CF label because it has not been known to cause cancer. OW45 costs 30% more than CF12. FlexenGate buys $1,300,000 of CF12. The management accounting staff gathered the following Chemical: CF12 Materials handling Inspection Cost per day Warehousing Rework $400 200 300 300 The engineer estimates that OW45 will change the daily costs because it is less dangerous. However, it does not work quite well so the rework rate is higher. Flexengate works 300 days per year. 30% decrease in materials handling 30% decrease in inspection 50% decrease in warehousing 15% increase in rework The marketing people are not sure what the impact of the new label would be on sales. You need to help them assess whether think it is worth it to use QW45 instead of changing the label. 

Required: 

A. Prepare a schedule comparing the costs of the three alternatives: current; new label, nand ew chemical. 

B. If they only the financial analysis and chose to use the new chemical, what is the minimum value they are assigning to the impact on customers of having the new label?
 

Answer rating: 100% (QA)

A The schedule is as follows Current CF12 1300000 Materials handling 4000... View the full answer