Invent Electronics manufactures 240,000 55 inch 4K TVs each year. The variable and fixed costs of rework and repair the TVs are as follows:
Requirement 1. Should Invent Electronics change to the new component? Show your calculations. Relevant costs over the next year from changing to the new component equal Now calculate the cost savings and additional contribution margin if Invent changes to the new component. Iraent Electronies chargo to the new comporiont. Hasted upon the incremertal conts and reveruet. 0. None of the aboes because the cost of quality thack be fre only deciding factod. Invent Electronics change to the new component. Requirement 2. Suppose the estimate of 2,400 additional TVs sold is uncertain. What is the minimum number of additional TVs that Invent Electronics needs to sell to justify adopting the new component? Based upon the incremental costs and revenues, A. Invent can justify investing in the new component only if they sell a minimum of 5,157 additional TVs. B. Invent can justify investing in the new component only if they sell a minimum of 2,757 additional TVs. C. Invent can justify investing in the new component only if they sell a minimum of 7,121 additional TVs. D. Invent can justify investing in the new component without making any additional sales. Requirement 3. What other factors should managers at Invent Electronics consider when making their decision about changing to new component? (Select all that apply.) A. Higher quality also improves the morale of employees working in the company and their care and commitment to improving processes. B. Nonfinancial factors such as the reputation benefits of high quality that often cannot be quantified in terms of higher sales. This pertains to both current customers continuing to buy from Invent Electronics and new customers. C. Management should consider the ability to save on the fixed costs of rework, customer support, and warranty repairs: D. None of the above because the cost of quality should be the only deciding factor. Invent Electronic's 4K55 inch TV's have a quality problem that causes shadows in the picture. Its engineers suggest changing a key component in each TV. The new component will cost $27 more than the old one. In the next year, however, Invent Electronics expects that with the new component it will (1) save 9,600 hours of rework, (2) save 1,020 hours of customer support, (3) move 320 fewer loads, (4) save 9,600 hours of warranty repairs, and (5) sell an additional 2,400 4KTVs, for a total contribution margin of $2,184,000. Invent Electronics believes that even as it improves quality, it will not be able to save any of the fixed costs of rework or repair. Invent Electronics uses a 1-year time horizon for this decision because it plans to introduce a \$K TV at the end of the year. Data table
