lightening bulk company is a moving company specializing in transporting large items worldwide. the firm has an 85% on-time delivery rate. twelve percent of the items misplaced and the remaining 3% 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 $300 per item. last year the firm shipped 5,000 items with an average freight bill of $200 per item shipped.

the firm's manager is considering investing in a new scheduling and tracking system costing $150,000 per year. the new system is expected to reduce misplaced items to 1% and lost items to 0.5%. furthermore, the firm expects total sales to increase by 10% with the improved service. the average contribution margin on any increased sales volume, after cost savings associated with a reduction in misplaced and lost items is expected to be 40%.

Based on a relevant -cost analysis, should the firm install the new tracking system? show calulations.