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10. Great Expectations, INC. is contemplating installing a computerized, just-in-time inventory and material system. The current monthly costs of warehouse rental of $500, Insurance of
10. Great Expectations, INC. is contemplating installing a computerized, just-in-time inventory and material system. The current monthly costs of warehouse rental of $500, Insurance of $200 can be completely saved. Also, two warehouse people at $3,000 per month and per person will be reduced by half. In addition, the company's CPA estimates the change will free up $200,000 of working capital which can be invested in Government T-bills at 5%. New monthly costs of $2,500 for a quality control inspector will be incurred. The company should a. proceed with the system and save $22,200 per year. b. proceed with the system and save $24,400 per year. C. proceed with the system and save $2,200 per year. d. reject the system because it will cost $7,800 per year
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