The manager at the Screen Saver Manufacturing manufactures screen savers.The manager continues to find ways to reduce manufacturing costs and the manager received a proposal from Entrepreneurial Consultants to rearrange the production in the upcoming year.The managerial accountant provided the following information:

Required
Compute the current and proposed information and decide whether management should accept the proposal.Which of the following decisions should management accept?
A)$138,000;Current
B)$120,400 Proposed
C)$118,000;Current
D)$124,000;Proposed
E)$180,000;Proposed

Question

The manager at the Screen Saver Manufacturing manufactures screen savers.The manager continues to find ways to reduce manufacturing costs and the manager received a proposal from Entrepreneurial Consultants to rearrange the production in the upcoming year.The managerial accountant provided the following information:

Required
Compute the current and proposed information and decide whether management should accept the proposal.Which of the following decisions should management accept?

Required
Compute the current and proposed information and decide whether management should accept the proposal.Which of the following decisions should management accept?
A)$138,000;Current 
B)$120,400 Proposed 
C)$118,000;Current 
D)$124,000;Proposed 
E)$180,000;Proposed

Quizplus · Accepted Answer

B)Current Operations: [(5 × 2,300 × $12)] = $138,000
Proposed Operations: [(4 × 2,150 × $14)] = $120,400
The proposed cost is less.The manager should rearrange the operations.$120,400

The Manager at the Screen Saver Manufacturing Manufactures Screen Savers