A company intends to install new management software for its warehouse. The software will cost $50 000 to buy and will cost an additional $150 000 to install and implement. It is anticipated that it will save the company $45 000 through reductions in staff and $65 000 in general inventory costs in the first year after installation. What is the benefit to the company in the first year if they choose to install the software?
A)$180 000
B)$90 000
C)$110 000
D)$45 000

Question

Quizplus · Accepted Answer

The total cost of buying and installing the software is $200,000 ($50,000 + $150,000). The anticipated savings in the first year is $110,000 ($45,000 + $65,000). Therefore, the benefit to the company in the first year is $110,000 - $200,000 = -$90,000 (a negative number means the company is still losing money despite the savings). However, in the long run, the software can lead to significant cost savings for the company.

A Company Intends to Install New Management Software for Its