Investing $1,500,000 in TQM's Channel Support Systems initiative will at a minimum increase demand for your products 1.7% in this and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year's sales were $163,508,343. Assuming similar sales next year, the 1.7% increase in demand will provide $2,779,642 of additional revenue. With the overall contribution margin of 34.1%, after direct costs this revenue will add $947,858 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year's levels. How long will it take to achieve payback on the initial $1,500,000 TQM investment, rounded to the nearest month?

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13 months

TQM investment will not have a significant financial impact

19 months

6 months

A productivity index of 110% means that a companys labor costs would have been 10% higher if it had not made production improvements. Assume that Digby had a productivity index of 112% and that Baldwin had a productivity index of 103%. Now refer to the Income Statements in the Annual Report for Digby and Baldwin. Using the labor costs shown in the Income Statements, how much more did Digby save in direct labor costs compared to Baldwin by having a higher productivity index?

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$3,188

$2,869

$3,507

$3,347