Managers at Precision Products are considering a change in the method used to apply paint to the
Question:
Managers at Precision Products are considering a change in the method used to apply paint to the company's products. The new method represents the newest technology. Instead of traditional "wet" painting, it uses electromagnetics to make powdered paint adhere to product surfaces. Precision's major competitors already have adopted the new paint method. The new method would require replacement of the paint booths currently being used, resulting in a \(\$ 250,000\) capital expenditure. Nearly all of Precision's products require painting. The new paint method is expected to improve the paint quality, reduce the product rejects, and enhance customer satisfaction. Is the decision to change painting methods an operational or strategic capital investment decision? Explain your answer.
Step by Step Answer:
Managerial Accounting Information For Decisions
ISBN: 9780324222432
4th Edition
Authors: Thomas L. Albright , Robert W. Ingram, John S. Hill