10 The Langston Recreational Company (LRC) manufactures ice skates for racing, figure skating, and hockey. The company is located in Kearns, Utah, so it can be close to the Olympic Ice Shield, where many Olympic speed skaters train. Given the precision required to make skates, tracking manufacturing costs is very important to management so it can price the skates appropriately. To capture and collect manufacturing costs, the company acquired an automated cost accounting system from a national vendor. The vendor provides support, maintenance, and data and program backup service for LRC's system. LRC operates one shift, five days a week. All manufacturing data are collected and recorded by Saturday evening so that the prior week's production data can be processed. One of management's primary concerns is how the actual manufacturing process costs compare with planned or standard manufacturing process costs. As a result, the cost accounting system produces a report that compares actual costs with standard costs and provides the difference, or variance. Management focuses on sig- nificant variances as one means of controlling the manufacturing processes and calcu- lating bonuses. Occasionally, errors occur in processing a week's production cost data, which re- quires the entire week's cost data to be reprocessed at a cost of $34,500. The current risk of error without any control procedures is 8%. LRC's management is currently considering a set of cost accounting control procedures that is estimated to reduce the risk of the data errors from 8% to 3%. This data validation control procedure is pro- jected to cost $1,000 per week. REQUIRED Perform a cost/benefit analysis of the data validation control procedures. Based on your analysis, make a recommendation to management regarding the con- trol procedure. procedures is estimated to be 85 d reduces the risk to 3%. A erence that is, Cost of repro c. The current risk of data errors without any control procedures is a The data control validation procedure costs $1,000 and reduces the some point between 8% and 3% is a point of indifference that is cessing the data without controls = Cost of processing the data with the Cost of controls. Use a spreadsheet application such as Excel Goal Seek to solution