Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

im trying to find the cost per system per year Lightening Bulk Company is a moving company specializing in transporting large items worldwide. The firm

image text in transcribedim trying to find the cost per system per year
Lightening Bulk Company is a moving company specializing in transporting large items worldwide. The firm has an 80% on-time delivery rate Twenty-eight percent of the items are misplaced and the remaining 2% are lost in shipping On average, the firm incurs an additional $60 per item to track down and deliver misplaced items. Lost items cost the firm about $250 per item. Last year, the firm shipped 5,950 items with an average freight bill of $150 per item shipped The firm's manager is considering investing in a new scheduling and tracking system costing $145,000 per year. The new system is expected to reduce misplaced items to 16% and lost items to 0.50% Furthermore, the firm expects total sales to Increase by 25% with the improved service. The average contribution margin ratio on any increased sales volume, after cost savings associated with a reduction in misplaced and lost items, is expected to be 32.5% Required: 10. Based on a relevant cost analysis, should the firm install the new tracking system? Yes No 16. What is the estimated change in pretax cash flow under the proposed system? (Negative amounts should be indicated by a min sign. Round your answers to the nearest whole dollar amount.) Answer is complete but not entirely correct. $ 145 000 Cost of the new system (per year) Expected benefits each year from the new system Contribution margin from sales increase Cost savings from decrease in misplaced items-existing sales Savings from decrease in lost items-existing sales Change in pre-tax cash flow per year under the new system $ s $ 72,516 42,840 22,3138 is 137 689 7,331

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions