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Lightening Bulk Company is a moving company specializing in transporting large items worldwide. The firm has an $85\%$

on$-$time delivery rate. Thirteen percent of the items are misplaced and the remaining $2\%$ are lost in shipping. On average,

the firm incurs an additional $$69$ per item to track down and deliver misplaced items. Lost items cost the firm about $$350$

per item. Last year, the firm shipped $6,900$ items with an average freight bill of $$230$ per item shipped.

The firm's manager is considering investing in a new scheduling and tracking system costing $$158,000$ per year. The new

system is expected to reduce misplaced items to $1\%$ and lost items to $0\mathrm{.}50\%.$ Furthermore, the firm expects total sales to

increase by $10\%$ 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 $37\mathrm{.}5\%.$

Required:

$1$a$.$ Based on a relevant cost analysis, should the firm install the new tracking system?

Yes

No

$1$b$.$ What is the estimated change in pretax cash flow under the proposed system? $($Negative amounts should be indicated by a minus

sign. Round your answers to the nearest whole dollar amount.$)$

Answer is complete but not entirely correct.