Question

Country Western Clothing Outfitters is considering investing in an inventory tracking system. The system will require $10,300 in software costs and $8,200 in employee training costs. Computer hardware also must be upgraded for the system; the hardware upgrades are expected to cost $12,100. The expected benefits from the inventory tracking system should be $29,000. Do the benefits outweigh the costs, or do the costs outweigh the benefits, and by how much?
Answer Options:

A. Benefits outweigh costs by $10,500. B. Costs outweigh benefits by $1,600. C. Benefits outweigh costs by $1,600. D. Costs outweigh benefits by $10,500.

Answer 1

Answer:

B. Costs outweigh benefits by $1,600

Explanation:

Total costs are comprised by software costs ($10,300), employee training costs ($8,200) and hardware upgrades costs ($12,000).

$C = \ 10,300+\ 8,200+\ 12,000\\C=\ 30,500$

The benefits from the new system are $29,000.

Therefore, costs outweigh benefits by the following amount:

$C-B = \ 30,500-\ 29,000 = \ 1,600$

B. Costs outweigh benefits by $1,600.