Ch 1 solutions

Ch 1 solutions - (10 min.) E 1-16 a. To account for...

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(10 min.) E 1-16 a. To account for uncertainty in the amounts of future costs and benefits, we compute the expected value by multiplying the probability of each outcome by the dollar value of that outcome. b. To make a cost-benefit decision today, we must find the present value of the costs and benefits that are incurred in the future. c. The goal of TQM is to meet customer expectations by providing them with superior products and services by eliminating defects and waste throughout the value chain. d. Most of the costs of adopting ERP, JIT, expanding into a foreign market, or improving quality are incurred in the present , but most of the benefits occur in the future . e. Throughput time is the time between buying raw materials and selling the finished products. f. ERP serves the information needs of people in accounting, as well as people in marketing and in the warehouse. g. Firms adopt e-commerce to conduct business on the Internet. h. Firms acquire the ISO 9001:2000 certification to demonstrate their commitment to quality. (10 min.) E 1-18 Req. 1 Total costs of adopting JIT: Employee training. ........................................ $13,500 Streamline plant’s production process. ..... 37,000 Supplier identification. ................................. 8,000 Total costs. .................................................... $58,500 Req. 2 Benefits of adopting JIT: Savings in warehouse expenses. ........... …. $ 97,000 Lower spoilage costs. ............................ …... 46,000 Total benefits. ................................... ………. . $143,000 Req. 3 Expected total benefits. ........................ …… $143,000 Expected total costs. ............................. …… (58,500 ) Excess of benefits over costs. .................... $ 84,500 Wild Rides should adopt JIT because the expected benefits exceed the costs. (15-20 min.) P 1-21 A
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Req. 1 Benefits if the project is successful: Savings from more efficient order processing……………. $185,000 Savings from streamlining the manufacturing process…. 275,000 Savings from inventory reduction…………………………… 220,000 Profits from increased sales. .......... …………………………. . 150,000 Total benefits if the project is successful…………………. . $830,000 Req. 2 There is an 80% chance that the project will succeed and provide benefits of $830,000. There is a 20% chance that the project will fail and there will be no benefits. The expected value of the benefits is: Benefit Probability Expected Value of
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Ch 1 solutions - (10 min.) E 1-16 a. To account for...

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