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2) Premier Corp expects to spend $800,500 in 2020 in appraisal costs if it does not change its incoming materials inspection method. If it decides to implement a new receiving method, it will save $60,500 in fixed appraisal costs and variable costs of $0.50 per unit of finished product. The new method involves $140,000 in training costs and an additional $150,300 in annual equipment rental. Internal failure costs average $200 per failed unit of finished goods. During 2019, 4% of all completed items had to be reworked. External failure costs average $460 per failed unit. The company's average external failures are 2% of units sold. The company carries no ending inventories, because all jobs are on a per order basis and a just-in-time inventory ordering method is used. Compute the change in the external failure budget, if 600,500 units are used and assuming external failures are reduced by 12%.

2) Premier Corp expects to spend $800,500 in 2020 in appraisal costs if it does not change its incoming materials inspection method. If it decides to implement a new recelving method, it will save $60,500 in fixed appraisal costs and variable costs of $0.50 per unit of finished product. The new method involves $140,000 in training costs and an additional $150,300 in annual equipment rental. Internal failure costs average $200 per falled unit of finished goods. During 2019,4% of all completed items had to be reworked. External failure costs average $460 per failed unit. The company's average external failures are 2% of units sold. The company carries no ending inventories, because all jobs are on a per order basis and a just-in-time inventory ordering method is used. Compute the change in the external failure budget, if 600,500 units are used and assuming external failures are reduced by 12%

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