Gluck Metal Works stamps sheet metal into blanks that are used in a variety of consumer products.The average cost for sheet metal is $75 per ton.Gluck's waste disposal company charges $50 per ton to dispose of manufacturing waste.The stamping process currently employed by Gluck generates an average of 120 tons of waste per month.
Gluck has developed a new system that would increase the efficiency of its stamping process.The new system has an annual cost of $45,000,but would reduce stamping waste by 50%,the remaining waste would be sold to a recycler for $30 per ton.What is the net savings if Gluck implements this new system?

Question

Quizplus · Accepted Answer

A)
Reduction in cost: 120 × 50% × 75 = 4,500 × 12 = 54,000
Receive from recycler: 120 × 50% × 30 = 1,800 × 12 = 21,600
Waste disposal charge saved: 120 × 50 = 6,000 × 12 = 72,000
Net Savings: 54,000 + 21,600 + 72,000 - 45,000 = 102,600

Gluck Metal Works Stamps Sheet Metal into Blanks That Are