TranminusNorth American Industries Inc. is looking at a change in its manufactur

Question

TranminusNorth

American Industries Inc. is looking at a change in its manufacturing process that will cause manufacturing cycle time to increase from 250 hours to 425 hours. The increase in the manufacturing time will result in an estimated loss in revenues of

$ 15 comma 000$15,000.

Carrying costs are estimated at

$ 2.00$2.00

per hour and the controller estimates that

5050

orders for raw materials are expected for the year. What is the expected change in revenues as a result of the increase in manufacturing cycle time? (Round the final answer to the nearest whole dollar.)

Explanation / Answer

Estimated loss in Revenue (15000$)

Additional Carrying cost

($2X50X(425-250))= (17500$)

Estimated change in revenue 32500$

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